Q. I’m appalled that many U.S. companies are moving their official headquarters to countries with lower corporate tax rates than ours. What do you think about this?
A. This trend of reincorporation overseas (through merger with a foreign firm, a strategy called inversion) is perfectly legal under current tax law. The U.S. company benefits because it reduces its total global income taxes, enabling it to compete better with multinationals based in countries with much lower taxes. The top corporate tax rate on a U.S. company’s earnings anywhere in the world—not just in this country—is 35%, the world’s highest.
