President Obama in a speech this week called for "economic patriotism." He's decrying US companies that set up or buy a company in another country to take advantage of that country's lower corporate tax rate. The tactic is called a corporate inversion, and billionaire investor Marc Cuban is up in arms about the strategy, too.
Cuban took a stand Friday on Twitter:
The the latest debate is inspired by the pace of inversions, which has been speeding up. Pfizer (PZE) tried to buy London-based AstraZeneca (AZN) in a failed attempt to move its tax address to the UK. Bloomberg reports eight other moves are pending including that of Minneapolis company Medtronic. Companies like Walgreen (WAL) have reportedly looked at the idea. More broadly, more than 40 US companies have moved their addresses to lower tax countries since 1982, often through a takeover of a smaller company.
While plenty of politicians have talked about reforming the flawed tax code, they've yet to succeed on tax reform. So is a plea for "economic patriotism" a substitute for a change in policy? In the accompanying video, Yahoo Finance's Jeff Macke argues absolutely not, saying these companies aren't flouting patriotism, they are simply following the law. Check out the interview above for more.
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