14th candidates spar on keeping companies in America
Nearly 50 U.S. companies reincorporated overseas in the past 10 years in attempts to lessen their U.S. taxes on income earned abroad.
But candidates for the 14th Congressional District disagree on what's driving the exodus and how to keep companies like Burger King and Chiquita from choosing foreign addresses.
The relocations, known as corporate inversions, occur when an American corporation buys or merges with a foreign company and moves its official headquarters to that foreign nation.
The tax advantage comes in because the U.S. taxes both businesses and citizens on income earned both in America and abroad. In contrast, foreign nations generally tax income earned within their own borders.
Incumbent Republican Randy Hultgren of Winfield said such business moves are a “wake up call” that “other countries are doing a better job of addressing their tax burden on corporations.”
Hultgren said it's not un-American for a business to make the best decisions for their company.
“What we need to be doing is looking at ourselves and saying, ‘Why are these other nations doing such a better job of running their own governments and doing it with a lesser corporate tax rate and providing necessary services at less cost?'”
Hultgren said the solution to keeping American companies in America is a total reworking of the tax code to make staying in America the better business decision.
“The tax code is so confusing, but we have to make sure we don't do more harm than good when we are making some of those important changes.”
That echoes calls by congressional Republicans for a revision of the tax code, including a reduction in the top corporate tax levy. But Democrats, evidenced by legislation introduced by Sen. Dick Durbin, have favored a pinpointed approach to the tax code that targets only corporate inversions.
Dennis Anderson, the Democratic candidate for the 14th District, said the corporate tax should not be increased, but loopholes that allow corporate inversion should be closed.
“I don't think there's anything in the tax code that can't be tweaked,” Anderson said. “There's always room for improvement. We should clean it up and clarify it.”
Anderson, of Gurnee, said a major problem is the emphasis companies now place on inflating shareholder value to the detriment of reinvesting in growing the company.
“The push is for short-term shareholder value, which really has the result of penalizing customers and workers,” Anderson said. “Companies are spending their revenues on stock buybacks and distributions. The result is that these dollars are not being used for reinvestment in the business.
“That impacts the job market. It has an effect on employee wages and salaries. But it does very well for large shareholders. If you have someone with a large number of shares, which allows you to put pressure on the company to buy shares back, who wins?”
The U.S. has the highest statutory corporate tax rate in the developed world, according to PunditFact, though that rate is generally reduced by various deductions to a less severe effective rate of 27.9 percent.
The 14th Congressional District includes parts of DuPage, Kane, McHenry and Lake counties.