U.S. Chamber Defends “Inversion” Tax Strategy

Popular outrage at the corporate tax strategy known as inversion has been building, and Democrats, including the President and Senator Carl Levin of Michigan have made it a political issue. Inversion is the acquisition of or merger with a foreign company by a U.S. company, which then re-incorporates in the foreign venue, reducing its tax burden. J.D. Foster, deputy chief economist at the U.S. Chamber of Commerce, mounts a defense of the practice on the Chamber’s website. There is a grain of truth to Levin’s argument, Foster acknowledges, but he says it’s a small grain. “The fact is,” he writes, “whether a company headquarters in the U.S. or abroad, income earned in the U.S. is taxed by the U.S.”