Living standards, jobs and long-term economic growth are at risk because an increasing number of U.S. firms are likely to relocate overseas due to America’s current “uncompetitive and anti-business” corporation tax rate, warns the boss of one of the world’s largest independent financial advisory organizations.
U.S. companies move their headquarters to relatively lower tax jurisdictions
The prediction from Nigel Green, the founder and chief executive of deVere Group, which operates in 100 countries worldwide, comes after the Chairman of the Senate Finance Committee, Roy Wyden, once again has spoken out against inversions, or mergers, in which U.S. companies move their headquarters to relatively lower tax jurisdictions, such as the UK and Luxembourg.
Mr Green comments: “Unless the current corporation tax is slashed, it is highly likely that an increasing number of America’s multinationals will relocate to overseas jurisdictions with lower tax rates.
“The current U.S. rates are widely perceived in the corporate world as uncompetitive and therefore comparatively anti-business. This is evidenced by the fact that a growing number of American firms are considering such a move out of the U.S.
“It is our experience that the vast majority of American companies do want to remain headquartered in America, but with the tax code as it stands, and with obligations to shareholders, there is mounting pressure to consider overseas, lower tax destinations.”
He continues: “With this in mind, the time to reduce corporation tax is now. If America’s tax rate remains as it is, capital flight will, I suspect, soar and potentially become a major problem.
“Of course, should this phenomenon develop, investment will stall which will hit productivity and subsequently wages, jobs, living standards, and long-term economic growth.”
Corporations don’t pay corporation tax, people do
He adds: “To the opponents of reducing corporation tax who cite that higher corporation tax is preferable to higher personal taxation, I say this: corporations don’t pay corporation tax, people do. The burden of comparatively high corporation tax is carried by investors through lower returns, workers through reduced wages, and/or consumers through higher prices.”
The deVere Group CEO concludes: “By significantly lowering the corporation tax rate, the collection base would be greater and the revenue collected would be higher.
“A reduction would instantly make the U.S. a more desirable location for businesses and investors.
“Essentially, it would powerfully tell the world that the United States is open for and supportive of business.”
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About deVere Group
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of 70 offices across the world, more than 1,200 staff, over 80,000 clients and $10bn under advisement.