Banks Cash In on Inversion Deals Intended to Elude Taxes

Big investment banks are financing merger deals that encourage US corporations to relocate headquarters overseas to dodge US taxes. The banks anticipate “nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad (without actually moving),” reports Andrew Ross Sorkin, editor of DealBook for the New York Times. The deals known as inversions are legal, but have stirred public outrage. The investment bankers – with Goldman Sachs, JP Morgan Chase, Morgan Stanley and other banks that benefited from massive government bailouts just a few years ago – actively promote mergers for tax-reduction purposes, hurrying to complete deals before legislators close the loophole. Business promoters claim the deals increase competition and reduce consumer prices. The true goal is probably higher profits. The business community claims to want reduced corporate taxes through tax reform, but balks at giving up subsidies and loopholes. Sorkin concludes that the world may be on a sad race to zero tax rates that benefit only a few. – YaleGlobal