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After Killing The Biotech Bubble, Congress May Just Have Ended M&A Mania
Having pricked the Biotech bubble with the simple questioning of the ballooning prices of drugs, it appears Congress may be well on its way to bursting the M&A Mania as Senator Carl Levin pushes his anti-inversion legislation by increasing, once again, the complexity of the tax code:
- *SEN. LEVIN SAYS U.S. FACING `FLOOD OF TAX AVOIDANCE'
- *LEVIN BILL INCLUDES TWO YEAR MORATORIUM TO ALLOW FOR TAX REVAMP
- *LEVIN BILL RAISES THRESHOLD FOR INVERSIONS TO 50 PERCENT
“This is about leveling the playing field and rooting out flagrant tax abuse in our system that could lead to billions of dollars of lost revenue," said Sen. Tim Kaine, D-Va.
“In order to fully restore budget certainty, we need to look at abuses in the tax code as much as spending. The fact that companies can change their tax liability to low-tax jurisdictions on paper while maintaining operations and ownership in the U.S. is unacceptable and I'm pleased to join my colleagues to introduce this important fix.”
Well, we're glad they know what's best for all of us...
As Bloomberg summarizes,
Sen. Carl Levin, D-Mich., proposing legislation imposing 2-year moratorium on inversions, raising shareholder threshold to 50%, according to summary of legislation ( adramatic shift from current law where shareholders of non-U.S. company must own 20% of combined company)
It’s become increasingly clear in recent weeks that a flood of tax avoidance by multinational corporations is looming,’’ Levin tells reporters
Levin responding to at least 13 cos. that have conducted inversion mergers since 2011 to move headquarters out of U.S. into lower-taxed jurisdiction
Sen. Finance Cmte Chairman Ron Wyden has said he also wants to limit inversions retroactive to May 8; House Speaker Boehner said earlier today inversions are one reason tax overhaul is needed
Carl Levin's Fill Statement:
Summary of the Stop Corporate Inversions Act of 2014
Tuesday, May 20, 2014
The Stop Corporate Inversions Act of 2014 would significantly reduce a tax loophole that allows U.S. companies that merge with foreign companies to reincorporate offshore in lower-tax jurisdictions – known as an “inversion” - to avoid being subject to U.S. tax on their overseas earnings.
Under current U.S. tax law, the merged company is treated as a foreign company if more than 20 percent of the stock of the merged company is owned by stockholders who were not stockholders of the U.S. company or if the merged company has at least 25 percent of its employees, sales and assets where it is incorporated.
The Stop Corporate Inversions Act of 2014 increases the needed percentage change in stock ownership from 20 percent to 50 percent and provides that the merged company will nevertheless continue to be treated as a domestic U.S. company for tax purposes if management and control of the merged company remains in the U.S. and either 25 percent of its employees or sales or assets are located in the U.S.
The bill provides a two year moratorium on inversions that do not meet the stricter tests in the bill so that Congress can consider a long-term solution as part of general corporate tax reform. But we can’t wait for tax reform to stop the bleeding. If we continue to wait, we risk more American companies opting out of the U.S. corporate tax base by reincorporating in lower-tax foreign jurisdictions under the much more permissive current law applying to inversions.
The president’s FY15 budget contains a proposal to close this loophole, and the Stop Corporate Inversions Act largely mirrors that proposal.
While the US makes the tax code so complex everyone wants to get out of the country, in italy the PM wants to simply it so much people can file by text message:
Premier Matteo Renzi said Tuesday that the government's planned simplification of Italy's fiscal system should make it possible for people to pay their taxes via mobile phone text messages. "I'm convinced that if we work at it, we can make it possible to pay them (taxes) via an SMS," Renzi said. "Italy is a country that makes simple things complicated, but paying taxes must be simpler".
Renzi has embarked on an ambitious reform programme of institutional and economic reforms since unseating Enrico Letta, his colleague in the centre-left Democratic Party (PD), in February to become Italy's youngest premier at 39.
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Awww... Carl Levin is so exceptional, just like Jack Lew is!
Jack Lew went to China right before the meeting between Putin and Xi. Probably begging the Chinese NOT TO sign the gas deal with Russia or, at least, to keep using the Petro-Dollar. As soon as he comes back home, the MomJeans-in-Chief gives Eric Dick-Holder the “green light” to charge 5 Chinese illiterate farmers with hacking.
The only mention in our media about Lew’s visit is that “Lew and his three colleagues had spent 109 yuan (HK$136) on a meal of dumplings, cold dishes and tea.”
Exceptional, aren’t we? ;-)
Looney
Surely you aren't insinuating that US media is a shallow, self-serving farce factory?!
Whenever I hear a politico talking about "lost revenue" it makes my blood boil.
The Exodus approacheth!
SEN LEVIN SAYS "SOMEONE OUT THERE HAS MONEY WE HAVEN'T STOLEN YET"
Damn straight, Levine. Freedom, Democracy, Open Markets, Free Markets are only valid as long as the American CEOs, Wall Streeters and American Banks make money hand over fist.
All of a suddenly multi-nationals are avoiding taxes!? Haw haw haw haw. Where the hell have you been the last few decades?
The US REALLY needs those tax dollars now that China, Russia, and Iran are beginning to shun the highly-conjured currency.
Dont worry, this is mostly for show, to provide the fig leaf beneath which Congress will reach to 'expropriate' (Cypress-style) privately-owned assets they deem strategic.
Sad but true. And now comes the Scorpion and the Frog meme as well? "We give USA Inc all our monies and now we're shocked to learn they plan on avoiding the taxman while incomes dry up and our jobless prosperity rolls on"?
Cue "the surprise look" from the e-trade Baby.
Of course they're investing in recovery...it's just not ours (as in We the People's.)
The sentiment is appreciated of course...but in my view these monied folks know a (World?) war...and who's (them?) paying for it...when they see one.
So sure..."no good deed goes unpunished"...but that still leaves us policy folks looking for Betterman.
Maybe there's room for something that isn't partisan here after all.
These clowns don't get it. The economy is like the weather, the more you try to contain it, build "flood proof cities," etc. the worse an event gets. They're out of their depth, they're about to get swept away in the flood, and they'll build a new sea wall to try to contain it. It's all temporary.
guess levin, obama and congress missed the FLOOD of wasteful outrageous spending and fedponzi "flooding" banks with money
None of that borrowed $$$ was wasted. It was simply 're-allocated.'
"Democrats to target companies overseas to dodge taxes" - yeah, for donations!
GOP/Democrats, whetever it is......they are all corrupt assholes, guys. It's pretty fucking simple.
Election year head fake. Building the brand, so sales will pick up in the justice/practical market niche. So the consumer will buy a quality, not a real good or service.
Shiny facades for everyone!
The BioTech Bubble was popped by the new review process at the USPTO called IPRs.
Generics are invalidating the patents behind the name-brand biotech companies.
Google "PTAB Death Squads"
I invented the question mark, but no one will listen.
Pretty sure Apple has a claim they invented the thumb.
So CONgress votes repeatedly to offshore production and employment now they're upset about off-shored profit?
More theater from the laziest actors on the planet.
"Washington is Hollywood for ordinary-looking people."
Currency wars lead to trade wars which lead to world wars.
Scary but true.
"Downvotes go away!"
Why stop at just earth? There's a whole solar system and galaxy that needs to be taxed. Just think of all the windfall profits the sun is making. Besides, the sun is causing global warming! It's about time we stopped this unregulated sun from causing global warming.
Italians already have the simplest tax system. They just don't pay them.
I hated his character in Atlas Shrugged. What does Levn get for this, all I want to know.
"leveling the playing field" only helps the guy doing the leveling.
Normally they mean "leveling" not as in "balancing" but as in "razing".
The horse has left the barn here in the West. This legislation only pushes investors East. For us in the West attempting to break gravity it is now just another hurdle but it will become hiring of tax attorneys to create loopholes domestically again instead of Double Dutch. The way the world works is becoming very predictable to me. Sad it takes a couple decades to figure it out.
As long as the US doesn't have the trade protection, domestic content, and capital control laws the East has, US companies will head over there for the government subsidies. It's all of a piece, and Levin is just making noise about the least important part.
Of course, they are strip mining the US economy so it will take care of itself. The bottom is fast approaching.
"The way the world works is becoming very predictable to me. Sad it takes a couple decades to figure it out."
I'm right there with you. Took me about five years. Now I'm searching for a way to "live with what I know".
Is this a jobs creation incentive, or has congress won the employment war? Punish our way to Prosperity!
"Smoke yourself thin" and "improve your self-estem, stupid" complete the trilogy.
What is amazing is that Carl Levin does not understand that if you tax a company to much...they will leave...its that easy.....If labor costs to much..you move your manufacturing...its that simple...if people are buying your stuff over there...you move over there..its that easy...so the next time that Carl Levin wants to add to the complexity of the US tax code.... maybe he should think of what it does to the companies that he worries so much about and their employees...hes a Socialist idiot though and will not..he just likes to think he is in control and is a big poweful Congressman...
Sorry, but it's not his job to understand this. His job, like all others in DC, is pure extortion.
For years I've been hearing the idea that if you tax corporations they will leave. Will guess what, we didn't tax them due to loopholes and THEY LEFT ANYWAY. I don't buy that bullshit story anymore....
A lot of corporations get large refunds on taxes they never paid.
Since the WTO/Nafta/NWO neoliberal religion claims all nationalism is a superstition, leaving or not leaving shouldn't matter. Or at least, that's the doctrine we're being given.
Corporations carry entire divisions to simply navigate the business through the loopholes. You must count that into your misallocation calculation.
Levin. Go back to Israel.
Better rich corporations than me! Corporate profits are at a record high, wages at record low. Who ya going to call?
Yeah, if only it worked that way...
The high of US economic prowess and the best era for the middle class was when the US government was elited by manufacturing magnates instead of financial rentiers. These magnates made sure that technical innovation was nutured by protecting nascent industries that would eventually grow to make American the envy of the world.
Not anymore, to the leaders of the US, the people and the countrie's industries are look upon as a commodity that is sold to the highest bidder.
Now he's done it. The u.s. will end up expatriating american businesses and Putin finds himself in the enviable position to welcome them with open arms and screw obozo in the process
I don't understand this perspective. If the corps leave, we don't buy thier stuff.
.
"While the US makes the tax code so complex everyone wants to get out of the country..."
The tax code is made complex by thousands of tax lawyers arguing that up is down and night is day, and the judges who nod and go along. That and the habit of selling tax breaks to local interests.
If corporations wanted a simple tax code they would lobby for it. Instead they want to obscure it so the public doesn't realize what is going on...
Something tells me this will hit Aztrazeneca's stock value.
They killed the Golden Goose, so now they're trying to butt fuck it?
I don't really give a fuck about M&A hi-jinks.
All I know is that Carl Levin has spent every waking hour of his adult life trying to destroy my country.
Nice to know it's a simple matter of ENEMIES!!! All our problems are cuased by ENEMIES!!! Just unleash the popular anger at ENEMIES!!! and we can get back to a perfect world.
Scrapingby
Did I type something inaccurate or untrue? Please point it out.
Dill snip.
You are no fucking patriot if you can stand by and watch these corporations hollowing out America on the back of the individual taxpayer. We are sending our children to die so these fuckers can keep on digging America a deeper grave. And you want to blame Levin?
Agree, American males have lost their balls. A male in full testosterone mode would fight to the bitter end for his territory to provide for his family.
Well, you cannot exonerate the hyper-partisan warmongering Levins of the world. They share the blame.
Slightlyskeptical
Yes. Problem?
Capital controls in disguise. These things are always interesting because they show who's in power depending on which way they go.
Dumbass Americans love their tyranny - they vote for then passively stand by and allow it year after year - they deserve this shit, good and hard, the harder the better - dumbfucks.
We won't close the border to people crossing in from the South, but we will lock the door to those leaving. Balloons work that way, until they pop.
Translation: "It is totally unacceptable that companies can understand the tax code and act on that to minimize payments when nobody else can understand it, especially Congress".
Is this Carl "Shitty Deal" Levin?
Cause you make it sound like Italy's house is in such good order....
Actually, why do you need to file at all and I don't mean no taxation. If there was a flat tax, the average sheeple would simply have it deducted each paycheck and there would be no need to file. This would free up the IRS to focus on un-average sheeple.
When you file now, there is no adjustment to what was taken out for Social Security tax so don't tell me it can't be done.
"Inversion" is yet another fine example of "un-speak". Technical euphemistic babble used to obfuscate and camoflage the simple facts. What is wrong with: offshore reincorproation?
I was short and sweating my ass... THANK YOU SENATOR LEVIN FOR SUCH A STUPID WEALTH DESTROYING IDEA.......
Whew.... saved by the bell............
A Democrat from Michigan. Shocker. He wants every city to look like Detroit.
Face reality, there is no way on this side of hell freezing over that the code will get simpler.
The tax code is nothing more or less than a code designed to seed vested interests and is designed to control more than raise taxes.
It has no more chance of being rewritten that the black monkey repealing all the SSA regulations.
Cannot happen..Instead it will actually cause it explode and all attempts will be made to raise ALL taxes whilst turning American Morons against any form of business that does something it needs to survive.
I am not talking about fucking crony capitalist suck you dry funded by the fed shit holes
I'm talking straight acting normal small businesses that spend most of their life trying to comply with shit for brains wankers writing tax code like the dumb cock sucking jewboy Levin that makes them either give up and shut shop or fuck off completely.
If you don't bring this corrupt sham down now then you will live like a farmers peasant slave all your life
When will Levin propose using the NSA's capabilities to help the IRS identify tax cheats, domestic terrorists, and (my favorite) domestic terrorist tax cheats?