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Carl Icahn Launches Super PAC To Promote "No Brainer" Tax Reform, Combat Tax Inversions

Tyler Durden's picture




 

While not vocally warning investors about the dangers of the market bubble this time (except in AAPL, where buybacks are encouraged), moments ago Carl Icahn released a letter in which he said that he is launching a Super PAC "with an initial commitment of $150 million from me personally. The first thing the PAC will do is focus on the pernicious effects that are occurring and will continue to occur as a result of Congress’s failure to immediately stop so many of our great companies from leaving our country." In other words, Icahn is taking on tax-inversions: "Many individuals are asking me to take action and I have obviously decided to do so."

We expect the ultimate outcome of Carl Icahn's Super PAC will be to make it easier for activists to pressure management teams into buying back even more of their shares - perhaps by granting them a tax amnesty on repatriating some of the $2 trillion in offshore cash if used for shareholder friendly activity - but then again we tend to be cynical.

Full letter:

Letter Discussing Desperately Needed Legislation

October 21, 2015

I have sent the following letter to all members of the House Ways and Means Committee, the Senate Finance Committee, and the Majority and Minority Leaders of the Senate and the Speaker of the House.

For the past 40 years I have worked diligently to see that errant CEOs and boards were held accountable, and few would disagree that my efforts greatly enhanced the value of hundreds of companies, making many billions of dollars for shareholders. I believe the time has come to also hold Senators and Congressmen accountable for the current gridlock in Congress that prevents important legislation from being passed. This is why I’m currently preparing to form a Super PAC with an initial commitment of $150 million from me personally. The first thing the PAC will do is focus on the pernicious effects that are occurring and will continue to occur as a result of Congress’s failure to immediately stop so many of our great companies from leaving our country. This exodus has often been called “corporate tax inversions.” While I plan to raise third party funds, I believe my own commitment of $150 million to the PAC will be more than enough to make voters fully aware of the horrible consequences that will ensue if Congress fails to pass legislation immediately to stop these “inversions.” I recently received an outpouring of emails and letters after pointing out the absurdity of this situation in a recent video (which is posted on my website: www.carlicahn.com). Many individuals are asking me to take action and I have obviously decided to do so.

The issue of corporate tax inversions is so important because many of this country’s great companies are currently merging with or being purchased by foreign companies. In the last few years over 50 companies have left the country through “inversions,” representing over half a trillion dollars in market value, hundreds of millions in tax dollars, and tens of thousands of jobs.  If this exodus is allowed to accelerate, there will be disastrous consequences for our already fragile economy, as well as meaningful and unnecessary job losses. Foundational American companies, such as Pfizer, Walgreens, Monsanto, Omnicom, etc., have been reported publicly to be considering corporate “inversions” and currently many others are planning the same behind closed doors.

I credit my success as an investor in large part to understanding markets and the motivations of large companies. Companies have “interests.” They do not have “beliefs.”  While they can contribute greatly to America, they are not “patriots.” They are motivated to take actions that are in the best economic interests of their shareholders, which include leaving the country if it offers a compelling opportunity to dramatically increase profits.  Ironically, it is the “short term” oriented shareholders (mostly hedge fund managers) who benefit the most when, through an inversion, a foreign company pays a premium for an American company.  In fact, these large holders are currently pressuring companies in which they own large positions to expatriate through “inversions” so that the value of the stocks they hold will afford them large “short term” profits. Some have argued that I am “short term” oriented. To preempt this possible criticism of my record, the average holding period for stocks in our portfolio is five to seven years.

We can solve the dangerous problem we face by passing legislation for international tax reform as outlined in the framework put forth by Senators Charles Schumer and Robert Portman, and supported by Chairman Paul Ryan, to fund the Highway Bill.

How does international tax reform prevent further inversions? The answer is simple. American corporations currently have over $2.2 trillion deposited abroad. They earned this money abroad and have already paid taxes on it to the country in which it was earned. These companies want to bring this money back to the United States, but they choose not to because we require they pay a “double tax” if they do.  We are the only country in the world that does this, and it’s counterproductive because it creates an incentive to keep the money abroad. A lower “double tax” would solve this problem. Most of these companies would be willing to pay a 5% to 10% incremental tax on this money upon bringing it back to the United States where much of it would be invested in new capital and used to create new jobs. Additionally, the nearly $200 billion in new taxes thus realized could be used in part for the Highway Bill which is vital given that our nation’s infrastructure is recently ranked at a D+ by the American Society of Civil Engineers. Presently, Congress has only identified half the funding for a six-year Highway Bill, which itself contains inadequate spending to sustain our highways because it fails to include international tax reform. Also, as proposed, this inadequate version of the Highway Bill does nothing to stop corporate inversions.

It’s a no-brainer for Congress to pass a Highway Bill that includes international tax reform because, if it does not, many of our companies, currently holding $2.2 trillion abroad, will invest this money outside the United States rather than pay the double tax we are now foolishly demanding, and which they will obviously not pay. Even worse, they might elect to be acquired by foreign companies through “inversions,” in which case the United States would not only lose the $2.2 trillion that would be invested in this country if we had passed a Highway Bill with international tax reform, but also lose all future taxes and job creation that these companies would have contributed. Additionally, our country would forfeit the $200 billion tax these companies would immediately pay, a portion of which would be used to fund the Highway Bill.  Not passing this bill immediately makes absolutely no sense. The Senators and Congressmen to whom I have spoken, including Charles Schumer and Paul Ryan, all agree we should enact this legislation immediately, and that after this December, because of elections, etc., it will be almost impossible to pass this legislation until the next administration. I’m certain, if we wait two years it will be too late. The obvious question: why hasn’t a bill that makes so much sense already passed through the House Ways and Means Committee, the Senate Finance Committee and been presented for passage before December? The American public has the right to an answer. There can be no defense for even a gridlocked Congress not passing legislation regarding the repatriation of $2.2 trillion, saving tens of thousands of jobs, stopping the exodus of hundreds of companies, as well as providing much needed capital for the Highway Bill. I promise, the PAC we have started will leave no stone unturned to find out who is most responsible for this ridiculous and unconscionable situation and what can be done about it. The inability of Congress to enact desperately needed legislation because of certain members not willing to compromise is reprehensible, and the members responsible must and will be held accountable. Intransigence and the unwillingness to compromise is a form of corruption that has ruined many businesses, as well as countries, and is now afflicting our great democracy. If it is not stopped now, I fear we will soon suffer the dire consequences.

I have been a student of the market and the economy for over 50 years, and I believe most would agree I have developed a keener insight than most concerning where the market and economy is going at any given time. I believe that today is an extremely dangerous time and have extensively outlined the reasons for why in my recently released video (www.carlicahn.com).  Indeed, the current economic news is very disturbing.  Even with interest rates close to zero, our economy is extremely fragile. The Fed can do no more to add stimulus and has already kept rates too low for too long, causing dangerous “bubbles.” And we certainly can expect no fiscal stimulus from our gridlocked Congress. This is by far the worst time imaginable to have an exodus of hundreds of companies. It would not only hurt our economy badly but would also meaningfully tarnish our reputation as a world power, giving our enemies abroad more ammunition to use against us. Not passing this legislation now will be recorded in history as a greater blunder then “Custer’s Last Stand.”

I have sent this letter to all the members of the House Ways and Means Committee and the Senate Finance Committee as well as the Majority and Minority Leaders of the Senate and the Speaker of the House.  I hope to be able to speak with you shortly.  I intend to make the letter public in the next few days. However, if you do not wish me to make public any conversations I have with you, I will respect those wishes.

Throughout history, a country failing to take “simple actions” necessary to prevent what could turn into disaster often leads to the decline of its hegemony.  I hope and pray that the House Ways and Means Committee and the Senate Finance Committee will take the “simple actions” necessary.  I am not exaggerating when I say if you do not, our country runs the risk of losing its hegemony and those of you who are in power will have only yourselves to blame.

Thank you for taking the time to read this and I look forward to speaking with you in the very near future.

 

 

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Wed, 10/21/2015 - 11:13 | 6694238 Momauguin Joe
Momauguin Joe's picture

Dude looks like a zombie. Do these fuckers never die?

Wed, 10/21/2015 - 11:17 | 6694255 doctor10
doctor10's picture

He's actually one of the few that has a rational reality perception meter

Wed, 10/21/2015 - 11:21 | 6694270 NotApplicable
NotApplicable's picture

Repatriated share buybacks will save America!

Why did I bother sobering up, again?

Wed, 10/21/2015 - 11:48 | 6694380 bania
bania's picture

Palpatine lives!

Wed, 10/21/2015 - 12:11 | 6694424 two hoots
two hoots's picture

Companies have “interests.” They do not have “beliefs.”  While they can contribute greatly to America, they are not “patriots.”

Let that sink in real good.  It is a truth and the working class needs to fix this in their belief system.   These are not flag waving, pledge of alligence saying, America pie lovers, what's good for America, loyalist, these are companies that move to the sound  of money, pure capitalism that even capitalizes on gov handouts, low Fed rates an all other opportunities.    It is not a pleasant truth.  Workers are proletariat that sell their skills, their ability, their labor for a wage and when that worker is no longer needed it is released, nothing personal.   We were much tighter during/after WWII but that socially binding system no longer exist.  Workers too must have "interest" and not be fooled by "beliefs".

 

Companies stop spending, CAPEX, when it is no longer in their interest/profitable.  They return excess profits to shareholders either through divy’s or share buy-backs. 

 

Government continues spending when it is in no ones interest (except theirs) and since they make no profit never give anything back to taxpayers. If they did make a profit would you rather them give it to gov workers or return it to taxpayers?

  

Wed, 10/21/2015 - 12:06 | 6694469 wisefool
wisefool's picture

was going to say something similar. There is absolutely no point in tax reform until we eliminate the ability for them to put it right back inplace. Oh and the next speaker of the house paul ryan basically has no other skill. he writes tax code. I doubt he can even poopie in the toliet.

destroy the current tax code and they will recreate it in months.

Wed, 10/21/2015 - 13:23 | 6694863 Cheduba
Cheduba's picture

"Making many billions of dollars for shareholders."

He means the CEO's that get paid in stock options, right?  What a saint!

Wed, 10/21/2015 - 12:57 | 6694749 JRobby
JRobby's picture

He has got to have one of the most well paid and effective security details covering him

Wed, 10/21/2015 - 11:14 | 6694239 SethDealer
SethDealer's picture

finally common sense. hope ol carl doesnt blow all his money on this

Wed, 10/21/2015 - 11:14 | 6694243 pods
pods's picture

Guy looks like he eats babies.

Wed, 10/21/2015 - 11:36 | 6694326 Lucky Leprachaun
Lucky Leprachaun's picture

No, just drinks their blood.  

Wed, 10/21/2015 - 11:38 | 6694333 Dr. Engali
Dr. Engali's picture

That's how he lives forever.

Wed, 10/21/2015 - 11:51 | 6694394 pods
pods's picture

These people make me wonder if there is a God.  

Little kids get stricken with cancer and die at age 5 yet these fucking psychopaths seem to go on and on. Buffett, Soros, Zbrez, the Queen, the lot of them.

Maybe I am just in a bad mood after watching that "Human Farm" video.

pods

Wed, 10/21/2015 - 12:09 | 6694483 cornflakesdisease
cornflakesdisease's picture

"These people make me wonder if there is a God."

Most folks want God to help them and humanity, but at the same time, they refuse to live by his moral requirements in how they live and treat each other, which actually is one reason why things are so messed up.

Last I checked, our original decendants fired him around 4026 BCE because they wanted to do things there way. 

How has that worked out?

Wed, 10/21/2015 - 12:48 | 6694703 pods
pods's picture

Not exactly sure what moral requirements a 5 year old, or a baby, fail to meet, but I'm listening.

I try to live by his ideals.  Called a conscience.  No organized religion needed to corrupt that.

I guess maybe cause I was raised Catholic, and the more you know, the more you know.

pods

Wed, 10/21/2015 - 11:15 | 6694247 One Day Only
One Day Only's picture

Easiest way to eliminate tax inversions? Lower the friggin tax rate and remove the incentive to leave. Why is "WE NEED A LAW!!!" always the answer.

Yeah, I know the answer. Doesn't mean it can't still piss me off.

Wed, 10/21/2015 - 12:54 | 6694726 DR
DR's picture

Did you ever stop to think that maybe Corporate America LIKES the tax inversions status quo?

First they build up a cash windfall, then they petition for a 5% to 10% tax rate....much cheaper than the proposed 20% stationary tax rate.

 

Wed, 10/21/2015 - 13:15 | 6694818 Vlad the Inhaler
Vlad the Inhaler's picture

The tax rate is low in these other countries because they either have high progressive income taxes, or they are god forsaken islands with no expenses.  Government needs revenue even if you greatly cut spending and waste.   Trickle down economics has never worked, ever.  David Stockman tried to tell you since the 80s but nobody listens.

Wed, 10/21/2015 - 11:15 | 6694249 JustObserving
JustObserving's picture

If you implement anything that Carl Icahn wants, he will make out like a bandit and you will be fucked.

Wed, 10/21/2015 - 11:17 | 6694252 buzzsaw99
buzzsaw99's picture

i want that mask for halloween.

Wed, 10/21/2015 - 11:17 | 6694254 Dr. Engali
Dr. Engali's picture

Icahn is has kid diddler written all over his face.

Wed, 10/21/2015 - 11:22 | 6694273 NotApplicable
NotApplicable's picture

Is there any other way to gain "preferred membership" status?

Wed, 10/21/2015 - 11:19 | 6694264 gcjohns1971
gcjohns1971's picture

Sounds like another massive Progressive power grab sold to ostensibly fix the results of the last massive Progressive Power Grab.

'International Tax Reform'... a.k.a global governance on the EU model.

These people are anti-life.

Wed, 10/21/2015 - 11:35 | 6694318 Lucky Leprachaun
Lucky Leprachaun's picture

Everything that goes on today is about global governance. 

Wed, 10/21/2015 - 11:26 | 6694293 spanish inquisition
spanish inquisition's picture

If corporations are "people" and I am a "people", why do I have to pay income tax no matter where in the world it's earned and they don't. Just sayin.....

 

Wed, 10/21/2015 - 11:27 | 6694297 BeaverCream
BeaverCream's picture

Your name doesn't echo loud enough.

Wed, 10/21/2015 - 12:21 | 6694557 spanish inquisition
spanish inquisition's picture

Would be a good question to ask Bernie. Would let everyone see what team he plays for when he dances around that one.

Wed, 10/21/2015 - 12:46 | 6694687 Jorgen
Jorgen's picture

"If corporations are "people" and I am a "people", why do I have to pay income tax no matter where in the world it's earned and they don't. Just sayin....."

 Because:

"All animals are equal but some animals are more equal than others."

 

George Orwell, 'Animal Farm'

Wed, 10/21/2015 - 11:34 | 6694316 Lucky Leprachaun
Lucky Leprachaun's picture

Watch it Carl, the sun's coming up!  Back to your crypt.

Wed, 10/21/2015 - 12:07 | 6694470 venturen
venturen's picture

can we have a look where his shell companies are? Or the scam tax deductions he taxes. Or that he pays income tax on his capital gains only many years when he sells. I pay my income tax yearly....how often does Buffet?

Wed, 10/21/2015 - 11:57 | 6694420 I am a Man I am...
I am a Man I am Forty's picture

Man, why all the hate for Icahn? The guy is spot on.

Wed, 10/21/2015 - 12:00 | 6694441 Colonel Klink
Colonel Klink's picture

Carl iCunt

Wed, 10/21/2015 - 12:03 | 6694450 venturen
venturen's picture

how about we raise capital gains taxes to the same as income tax....with no loopholes and paid yearly...just like the day labors. Buffet and Ichan paying taxes the same as the average man. Also put a 10% financial tax on money movement in and out of the country. And no IP garbage about how Apple moves all their IP to some foreign country. You manufacture off shore...10% excise tax on movement in and out of the country! Also no more shell companies...you own something....you are legally responsible.... If I donate $10 Million to a Superpac....your name is public information

Wed, 10/21/2015 - 12:14 | 6694512 Id fight Gandhi
Id fight Gandhi's picture

If you raised capital gains with a threshold of income say 1mm you'd end up with a fully balanced budget.

 

But let the poor fuckers that work for a living the so called "survivalist" class as the asshats call them making 50-100k pay the high taxes.

 

Wed, 10/21/2015 - 12:05 | 6694467 venturen
venturen's picture

"have already paid taxes on it to the country in which it was earned" what a load of bull.... Apple, Google, etc illegally move the IP to some zero tax haven and pay little. How about we  tax it like income tax I pay....so if they pay 5% or 10%....I WANT TO PAY 5% or 10%. 

Wed, 10/21/2015 - 12:10 | 6694486 cornflakesdisease
cornflakesdisease's picture

Creat the problem then provide the "solution".

Wed, 10/21/2015 - 12:33 | 6694619 Ouagadoudou
Ouagadoudou's picture

A few things come to mind:
- fucking asshole benefited from the system for a long time
- and he is good at it
- why does he play his move ? Anybody's guest but he is not there to lose money.
- he orchestrated everything with Trump since they have a deal
The kind of guy u follow tto understand what is the Endgame.

Wed, 10/21/2015 - 12:41 | 6694662 aztrader
aztrader's picture

Let's bring back the cash to do more share buy backs.................Every corporation in America that doesn't have foreign operations is forced to pay the current corporate rate.  There is no excuse to allow these international companies to skirt the taxes.   Why would anyone give them a tax break to bring the money back?  It should have been taxed to begin with.

Wed, 10/21/2015 - 12:45 | 6694677 DR
DR's picture

"bringing it back to the United States where much of it would be invested in new capital and used to create new jobs"

 

BULLSHIT* The money would be transfer to pay out dividends to the preferred 1% stock owning class.

 

Wed, 10/21/2015 - 13:05 | 6694748 nakki
nakki's picture

Wow 110-220 billion dollars should really help with that 18-19 trillion dollar deficit.

Hey Carl who's money protects those corporations overseas? Who pays for regime change in country's that interfere with "OUR" interests? 

I'm just hoping your company APPLE brings back those ingenious "designed in California" ads, those were brilliant. It seems there's nothing more American than offshoring jobs while being protected by the might of the US armed forces and crying about taxes.

Wed, 10/21/2015 - 12:58 | 6694754 cigarEngineer
cigarEngineer's picture

"a greater blunder then “Custer’s Last Stand.” "

 

Can you even into English ? Some intern will get pounded for this

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