Companies that have moved their headquarters from the United States to other countries to avoid being taxed may now get aid from the Federal Reserve, reports Bloomberg. Tax lawyers say this raises the question of who should receive this money, and who should not.
- Guidelines published by the Fed state that companies that participated in "corporate inversion transactions" while maintaining some sort of U.S. operations appear to be eligible for two new programs designed to provide credit to large employers. They will do so by purchasing new corporate bonds.
- There is bipartisan distaste for companies that have merged with overseas firms and changed their addresses. Former President Barack Obama called them "unpatriotic", and President Trump called them "disgusting".
- Some tax experts argue that though the practice is untenable, all companies with a large U.S. "footprint" should be eligible to stimulate the economy.
- Reuven Avi-Yonah, a corporate and international taxation professor at the University of Michigan Law School, says that they should still be eligible if they maintain a large U.S. workforce.
- The U.S. central bank plans to update “issuer certification requirements". But as of this moment, companies who have "inverted" are considered eligible.
- Tax lawyers created a way for companies to file overseas in the 1980s, when corporate tax rates were as high as 35 percent. During the Obama administration, these inversions were made less profitable, and therefore, less popular. Shortly after in 2017, President Trump signed in a 21 percent corporate tax rate.
- The White House has actively tried to win back companies that have left U.S. shores, but success in that endeavor has been limited.
- In countries like Denmark and France, companies who have fled to "tax havens" were not eligible for any bailout funds, making some in the U.S. question whether the country should follow suit.
“Under no circumstance should a company that has moved overseas to avoid U.S. taxes get a bailout,” said Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “The Fed is kicking dirt in the face of American workers with this move.”