Taxes

New tax rules may lead Medtronic to restructure deal

Medtronic will likely restructure the terms of its Covidien acquisition after the U.S. Treasury Department introduced new rules aimed at curbing tax inversions.

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The U.S. government has been promising a crackdown on tax inversion deals for months. Yet the measures announced Monday may not be enough of a disincentive for companies like Pfizer or AbbVie, which are tempted by the savings involved in snapping up smaller foreign rivals and re-domiciling themselves to avoid America’s labyrinthine tax system. The new rules, aimed at “when …

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The recent exodus of U.S. companies fleeing the country to lower their tax bill has a lot of people wondering: Are corporations paying their fair share of taxes? That depends on where you live—and whom you talk to. As the developed world becomes more tightly knit, corporate taxes are going to play an increasingly important …

Administration & tax inversions

The U.S. treasury is taking steps to block U.S. companies from reorganizing overseas to avoid taxes. What power does the administration have over these tax inversions?

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The debate around “inversions”—the process of American companies buying foreign companies to access capital and lower tax rates overseas—has reached the dinner table. But while the debate escalates over the dozen or so companies that are pursuing this endlessly wonky and complicated legal loophole, there are dozens more loopholes that companies are jumping through here …

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Below are the 20 companies in the S&P 500 that reported 0% (or lower) effective tax rates during the second calendar quarter of 2014 according to USA Today:

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Tax inversions may be coming to the hotel industry. The practice, wherein a firm buys a foreign company so as to move its tax domicile, has been derided by President Barack Obama as unpatriotic, but that has not stopped a wave of U.S. companies from fleeing to less taxed countries. Now, The Wall Street Journal reports that activist hedge fund …

Esteban Felix | AP Photo
Chiquita Brands is one of the companies that did a corporate "inversion" deal this year

A once-obscure tax dodge known as a corporate “inversion” is turning the debate over U.S. tax reform upside down. In an inversion, a U.S. company sets up or buys another company in a country with a lower corporate tax rate and then calls the new country home—thereby dodging U.S. taxes it would otherwise have had …

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President Barack Obama’s support of anti-inversion legislation only aims to put a patch on a larger problem: Corporate taxes in America are too high and the tax code needs to be overhauled. That’s the message from two CEOs interviewed on CNBC Thursday. “The current U.S. tax system puts U.S. companies at a disadvantage,” Eli Lilly Chief John …

David A. Grogan | CNBC
Treasury Secretary Jack Lew (l) talks with CNBC's Jim Cramer at the Delivering Alpha conference, July 16, 2014.

Congress needs to pass sweeping tax measures to keep companies from moving their operations overseas, Treasury Secretary Jack Lew said Wednesday. Speaking about so-called inversions, in which companies change their domiciles to other countries with more favorable tax structures than the U.S., Lew said action has to be taken soon. JPM’s Erdoes: Bond inflows ‘gives me great …

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The Apple store on Fifth Avenue in New York City.

Apple, Starbucks, and Italian car finance group Fiat Finance and Trade will come under the European Union (EU) spotlight with an investigation into how they avoided paying tax through using companies in Ireland, the Netherlands and Luxembourg. If these arrangements are found to have been in breach of EU law, the companies could be forced to …

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Nothing is more rewarding than making a donation to a worthy cause—except, perhaps, donating to a worthy cause and getting a tax deduction for it. While most donations stem from a desire to make a positive impact, there’s no denying that tax deductions are a big incentive—especially among the wealthy. In a study of high-net-worth …

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Most people think of asset allocation as a diversification of asset classes, such as large cap stocks, small cap stocks and bonds. What they fail to see is that diversifying assets by taxability can also be important in building a successful financial planning strategy to last you both through your working years and into retirement. …

Does M&A activity suggest US tax code is broken?

Pfizer‘s $100 billion offer to acquire British rival AstraZeneca appears driven, at least in part, by lower corporate tax rates in the United Kingdom, raising the question as to whether the U.S. tax code is broken. As part of the deal, the New York-based drug manufacturer would engage in tax inversion, a financial maneuver in which a …

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It’s not only Uncle Sam that needs money. State governments also collect tax revenues—even the seven that don’t have a state income tax. But some of them do a better job at giving taxpayers a bang for their buck—or to put it into Wall Street terminology, give better return on investment (ROI). Read More 5 ways to cut …