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发帖数: 29846 | 1 St. Louis Business Journal - by Kelsey Volkmann
Date: Thursday, June 2, 2011, 2:49pm CDT - Last Modified: Friday, June 3,
2011, 7:45am CDT
Walter Galvin, vice chairman of St. Louis manufacturing giant Emerson, was
in Washington, D.C., on Thursday testifying before Congress about how U.S.
corporate tax rates put American companies at a disadvantage when they
compete against foreign firms.
"Much of the world is ... reworking their tax codes to boost
international competitiveness. We need to wake up and join them if we want
the U.S. to stay competitive," Galvin told the Committee on Ways & Means in
the U.S. House of Representatives at a hearing on "How Business Tax Reform
Can Encourage Job Creation." "We can’t create jobs at home if we punish
those who headquarter here rather than overseas."
Galvin said Emerson, which reported $21.87 billion in revenue in 2010, paid
$500 million in U.S. income taxes last year under a 35 percent corporate tax
rate. He said rivals abroad don’t pay a significant second tax on non-U.S.
earnings repatriated to their home countries. The U.S., however, taxes the
worldwide profits of American companies at the high 35 percent rate minus
credits for any foreign taxes paid, he said.
Galvin said the U.S. tax rate guided Emerson's decision-making when it
bought British company Chloride for $1.5 billion last summer. "We considered
other options for that cash, such as bringing it to the U.S., but the U.S.
tax code would charge us an extra 10 to 15 cents in taxes on every dollar,"
he said. "Where is our return higher? A dollar invested in the U.K. or 85
cents in the United States?"
Galvin gave another example of how Emerson tried to buy APC, a Rhode Island-
based company that produces high-tech electronic equipment, with a $5
billion bid in 2006 but lost out to a French company, Schneider Electric,
who could offer $6 billion. "As part of a French company, APC’s dividends
sent to France would be taxed at under 2 percent," he said.
He also pointed to what he called a "lopsided incentive" to debt-load in the
United States. In recent years, countries around the world have tightened
tax rules regulating a company’s ability to load up on debt, take huge
interest deductions and lower their tax liabilities, he said, and these
strict regulations prevent multinational corporations, for example, from
using excessively leveraged financing to acquire other companies.
"If Emerson wants to acquire a company in India or China, we must generally
come to the table with cash, not debt," he said. "If one of their companies,
or any international company, wants to purchase an American company, U.S.
tax law encourages them to finance that acquisition with debt."
This lopsided nature of debt drove Belgium-based InBev's acquisition of
Anheuser-Busch in St. Louis in 2008, Galvin said.
"At the time of acquisition, Anheuser-Busch paid over $900 million in taxes.
InBev loaded up on debt to acquire Anheuser-Busch and is now enjoying huge
tax deductions," he said. "Based on my experience, I suspect InBev won’t
pay much in income taxes to the federal government on the U.S. profits it
earns from Anheuser-Busch for at least a decade."
Anheuser-Busch took issue with Galvin's description of the amount of taxes
the brewer paid or will pay. A-B President Dave Peacock said beer is heavily
taxed through beer excise taxes so he believes that as the largest brewer
in the United States, A-B pays more taxes than most companies operating in
the United States.
"In 2009 and 2010 combined, Anheuser-Busch actually paid more in U.S.
federal income taxes than we paid in the two years prior to the A-B InBev
merger," Peacock said in a statement. "Additionally, we expect this trend of
high federal income tax payments to continue for the next decade and beyond
. In 2009 and 2010 combined, A-B paid nearly $6 billion in federal taxes,
including nearly $2 billion in federal income tax."
Still, Peacock said A-B does agree with Emerson and Galvin that the U.S.
corporate tax system should be modified to make the United States more
competitive.
"Lowering the corporate tax rate, which ranks the highest of any
industrialized country in the world, is a step in the right direction to
make the United States more competitive," Peacock said. |
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