Libman Tax Strategies Ignores Chatter From the Media Talking Heads, Provides Balanced Look at Pros and Cons of Corporate Inversion

ARCADIA, Calif., July 31, 2014 /PRNewswire/ -- Adam C. Libman, CRTP and founder of Libman Tax Strategies (http://www.adamlibman.com), specializes in helping businesses legally reduce their tax burden. Lately, a strategy known as "corporate inversion" has received a lot of attention in the press. While much of that press has been negative, inversion is in fact a legitimate tax avoidance measure that offers many advantages to corporations and their shareholders.

Corporate inversion means relocating one's headquarters to a lower-tax country. America's combined federal and state corporate income tax of almost 40% is the highest in the world among rich nations, which incentivizes corporate inversion, among other strategies. The manner in which the IRS treats profits earned abroad is also relatively unusual and detrimental to business growth.

Today, mergers between American and international companies often result in corporate inversions for tax purposes. Walgreens is a prime example: having recently acquired a company in Switzerland, the country's leading drugstore chain may soon plant its flag in that tiny Alpine nation. Walgreens is projected to save $4 billion over the next five years, should the inversion go through.

"From a tax and income perspective, inversion just makes sense," explained Libman. "When American companies earn revenue from overseas operations, any associated profits are taxed twice – once in the country where the profits are generated, and again when the profits return stateside. Naturally, corporations want to avoid what amounts to double taxation."

Corporations have an interest in protecting profits and giving value to shareholders and customers. By repatriating elsewhere, they accomplish all of these goals. And because operations remain largely unchanged, corporations escape any of the usual criticisms that come from outsourcing and downsizing.

The only disadvantage to corporate inversion is that the court of public opinion has weighed in against businesses that adopt this strategy. Inversion has suddenly become a policy issue, and it's possible that some form of legislation on the issue will eventually come down the pipeline. What that will look like is anyone's guess.

Many economists and tax experts argue that discouraging corporate inversion through legislation ignores the actual problem, which is a tax code that's out of step with the rest of the developed world. They would rather see reforms to corporate tax structures that make America a more attractive base of operations.

In the 90s and early 2000s, Bermuda and the Cayman Islands were popular locales for corporate inversion. More recently, the UK, Ireland, the Netherlands and Switzerland top the list of destinations. Legally, a corporation must demonstrate a minimum threshold of business presence wherever they decide to relocate their headquarters.

Libman Tax Strategies has the knowledge and expertise to guide a business through the process of corporate inversion. Executives are encouraged to call 626-280-6865 to find out more.

About Libman Tax Strategies

Adam C. Libman first tested the entrepreneurial waters moonlighting after his day job. Before long, he was on his own, establishing long-term client relationships through a proactive stance on taxation. Libman Tax Strategies envisions tax planning as a year-round endeavor, requiring plenty of collaboration and communication at all phases. Six years later, the company's mission remains the same: making every effort to ensure 100% client satisfaction.

Libman Tax Strategies (http://www.adamlibman.com) serves the community of Arcadia, California, and surrounding areas. The firm empowers clients to realize their dreams via professional, aggressive tax reduction at every stage of business.

Contact:
Adam C. Libman, CRTP
(626) 280-6865
Email

SOURCE Libman Tax Strategies