Headline positively unamerican, big Time Companies are moving their headquarters overseas to dodge billions in taxes. Allan sloan wrote this be. He joins us from new york this one. Lets begin with the technical word for how companies do that, do this and that is inversion. What does this mean . Guest inversion is a polite way of saying that a company deserts the United States, moves its headquarters to another country, but Everything Else stays the same as it is. It does much less tax than what if it had not left the United States. Host how are companies able to do this . Guest because it isnt illegal. What typically happens is that a u. S. Company buys a Foreign Company, you do sort of a reverse transaction where technically the Foreign Company buys the u. S. Company and what used to be called the allan sloan corporation becomes allan sloan tlc and is incorporated in a different country. Nothing changes except the paperwork. Host how much does this mean in lost revenue to the treasury . Guest nobody knows. Its clearly billions and billions and billions. There was a projection that the joint committee on taxation did that said if these things are not stopped, it would cost 20 billion over the next 10 years, but everyone i talk to including some of the people involved with that said that estimate is way low because it didnt anticipate whats going on now. So the short answer is, nobody knows but it is a lot. Host you have it figured in your story. 19. 5 billion is what this committee estimated. You said thats conservative. Thats about 2 billion a year. Why do you say that is conservative . Guest because windows numbers were done, when those numbers were done, that was done before this big wave of inversions started. They were just taking a guess on how Many Companies would invert, if they werent stopped. They are guess its clearly low. I think, again, theres no point getting hung up on this number because its the only number there is and its too low and it makes no sense to obsess over it. Forgiving, 20 billion is a lot of money, but its even more than im worth. I mean, its just not what it is about. Host so why are companies doing this . What has been the trend . Guest they are doing it in order to improve their reported earnings per share, which in theory gets their stock price up. They are doing it to a less taxes to the United States than they would otherwise oh. And a lot of them are now starting to do it because they are afraid the train is leaving the station but they will be legislation if they dont do it now they wont be able to come at all of their competitors are doing it. So it sort of like a land rush in reverse. People used to lineup to come to the United States and established places here and immigrants poured in. Now its the opposite. Its sort of a mass exit of large, very wealthy, very powerful companies that just decided theyre going to leave. They do and right now theres really little to stop them. Host how Many Companies are we talking about . Give us some names of the companies. Guest okay. Most of the names of the people who have left, not names, people though, carmen is a name you know, the gps people. Garmin. There are also insurance companies, a Company Called medtronic which is a big medical Device Company has made a deal to leave. Walgreens, which has stores, what, everywhere. They are in the middle of trying to do a deal to leave. Pfizer in which is another huge company, tried to leave but that deal blew up for a variety of technical reasons house that we are talking with allan sloan about his cover story, positively unamerican, at a Time Companies that are moving overseas, moving their headquarters to dodge billions in taxes. We want to get your thoughts, your questions. Mr. Sloane, looks like your store that also appeared in the Washington Post on sunday is getting some traction. Here is the marketplace section this point of the wall street journal. The president is urging action to limit inversions. The abominate administration joins the growing debate over u. S. Companies reincorporating overseas, urging lawmakers to pass legislation to limit the moves. What can congress do . What can congress do . Guest congress can you actually two things. They can do something very quickly and very simply, which is to pass a certain technical bill that was sponsored by all people, i think the other combination in congress, sander levin in the house and carl levin in the senate. And that changes some of the technicalities that makes it very hard to invert right now. They could do that to stop the inversions. And then they could do the right thing which is to somehow fix the United States tax code so that its more attractive for companies to stay here than it is now. And let less attractive for them to lead. And with any luck, though i doubt they will do this, some way to throw a harpoon into the companies that have already deserted. Im sore, invert. I am forgetting im not supposed use that word deserter. That is ideally what has happened or ive no idea that will happen but thats what should happen. Host i also want to win a fourth line for Business Owners this morning. Want to hear from you as well. Join a conversation about the Corporate Tax rate and these Companies Moving overseas. Allan sloan, you call it positively unamerican. Why . Guest because it is. And again its not my title to i did not write that line but i love it and i embrace it. Its because the companies that are deserting the country, they still want to the american, right . They want to have a voice in our politics. They want to benefit from our system. They want to trade their socks in our stocks in our market. Village of our legal system. They want of our educational system. They want protections like the military. They want their employees children to live in good places and employees to live in good places. So they were all of these things that go with being an american but they just dont want to pay for it. I think thats unamerican. Host what about their fiduciary responsibility to their shareholders treasure it depends on how you define that. How you define that. I do find that as have an obligation to do what is best for the enterprise in the long run. The long run does not mean undermining your country to get the stock price up today. And alternately undermining the markets where you do a big part of your business. I think that this definition of judiciary duty as get the stock price up today, which is what shareholder value has come to mean, is just nonsensical and a distortion of a valuable concept. It is propaganda. I just dont want any part of it, which is why i wrote what i did. Up first in annapolis. Republican caller is on the air. Thanks foraller taking my call. I take great issue in what the gentleman just said. I would like the board of directors to do whatever they can to increase shareho should be erected at our tax system. I dont own a corporation that ip personal taxes. I dont even pay at the highest rate. The state, the local im upwards of 50 and the government is confiscating the property of the very few people in this country that work to pay for the people that dont work and i can see where that corporations are wise to do this. I just wish there was an analog short of giving up one citizenship. First of all a lot of people pay taxes. It would be 47 and not pay anything. That is you would forgive me me, nonsense and i abide away in a registered buffing. Im not a democrat. I am a registered me. I dont take sides in any of this but i do know how to count and my retirement and most of my net worth is in the United States stock and i dont want the companies to do this. Do you want your companies to do that . I dont want my companies to do that. I dont buy the argument does make the Company Better or the economy better. It ought to be fixed and it annoys me but to protest over the fact i dont like the tax system i stay here and fight for what i think is right and that is what i suggest you do. You sound like someone that knows how to fight. Go to it. Host democratic caller in virginia. Caller good morning. This is just something ive noticed over the last 30 years or so and unfortunately the reality is america has become nothing but a business where no one seems to really care about the goodness of our fellow citizens in the country. Its all about greed and the here and now and unfortunately even if the republicans in congress believed we needed to do this to stop the appropriations to take their Campaign Money and they are never going to do anything to stop this just the fact that obama would support it means that they would not do it. We have problems with the gerrymandering and our system is broke and i dont have an answer but i would say keep fighting. Thank you. Host the caller implies that congress doing anything other is stopping vm versions of overall tax reform isnt going to happen. So if it isnt going to happen why would these companies be leaving . Guest we dont know whats going to happen. Now again the companies are willing to do this. I dont think they are evil. I think they are misguided. I think they are wrong but if you really be leave that you have to do this, well what you and i think will happen doesnt determine what will happen. Its just not how things are. I think it is unfortunate that this has gotten to be politicized because i think it guarantees that little is likely to have them. I think that is a very bad thing. For a while i thought this might actually get fixed and it might still get fixed. People might surprise us because ive been reporting about this now for a while and have had any number of conversations oneonone with people on different sides and they are not really all that far apart on substance. The question is whether they can sort of suck it up and deal with this over what will be immense lobbying to do nothing and to get something done. I mean, if i werent an optimist i wouldnt do what i do for a living. I would still go sit in my cellar. I want to think that something could happen and i want to think that maybe some of the core and possibly my articles and possibly your shows can help people do the right thing. Host to Companies Say they might be motivated because the time is now. What do you mean by that . What was accomplished eight at . Guest any sort of rules and who knows what regulation the white house or the treasury might dream up to throw into the mix. Its very technical. I dont pretend to understand the technicalities. I understand the end results. I dont understand the tax but if you think you have this obligation to do it, you better do it now because it is easier to do it now. Host phillipa nashville tennessee. Caller thanks for this subject. I would sort of like to ask for numbers you started to show off what is that on top of the Court Warrant tax cuts of the republicans and the democrats and the bush tax cuts . The second part of it is the money that is shipped over there over the american tax bucket do you think that it would be equal to the announced that we are indexed to . I think that the National Debt is the amount that they are taken from it. I say that because it seems that about every month they are giving banks truly intend trillions of dollars and the average person host mr. Sloan . Guest i didnt hear the previous show that what we are supposed to talk about that i have been to note is that several years ago i sat down to figure out how much the bailouts of the Financial Institutions had caught the u. S. Treasury and much to my surprise, i discovered the treasury had actually made money on them. Not a tremendous amount of money but the rich that was involved and the amount of money that was involved in at the treasury came out ahead. So im not sure that i understand the question but im answering it as best i can. Host the money that is going elsewhere in the United States and the companies not paying in the treasury is the equivalent of our National Debt . Could that help pay down the National Debt . Guest what is it, 16 trillion. Thats more than the corporate profits for the whole world. To the extent that the treasury is collecting i think it ought to because the companies have adverted that increases the deficit and the debt but its not enough to explain the National Debt. It cant even be remotely close. Its just not possible. Host independent call. Caller im not i not anticommunist either but i feel our system is dependent on keeping the middleclass working if the people that have the money dont invest enough in to pay enough taxes however you get it from them to keep the middleclass working in our system doesnt work because the middle class pays the bills for the rich and the poor. Host what about that sentiment . Guest i agree we have to have a middleclass and for heaven sakes im part of it so probably the upper part of the middleclass but i wish people pay something. Maybe they dont pay as much as people think they should but if you look at the numbers people with very high incomes pay a lot of tax. The middle class is shrinking for a million Different Reasons and its a terrible thing and its a problem. Theres no question about it. But the thing is and whats causing that problem. Its caused by a million other factors. Host what about the Corporate Tax rate . 35 is that the problem . Guest may be. Its one of these things where 25 years ago when im sorry, 28 years ago 1986 it was cut from 46 to 34 and debated handstands and were foretold everything is great. They lowered the rate and broadened the base and in about 12 seconds people began looking for loopholes and then the world changed and now you have countries all over the world with lower rates than ours that are basically trying to drive the companies to go there because whatever revenue they get from the company is money to them and hear theyve lost money for us. So again in the ideal world the rates would be lower than 35 and you would eliminate many of the loopholes and you would make it very difficult in a million technical ways that i do not pretend to be able to understand or explain for the companies to invert. Thats what we ought to do. I dont know that we are going to do that or that we are going to do it in time to capture a part of the companies lining up to leave but thats clearly what we ought to do. Host what is the difference between a company that invert and a company like apple and ge that siphon off the earnings out of the United States . Guest thats the question we asked ourselves when i was putting this article together because ge and apple into and some of the Big Tech Companies are the victorious for taking what u. S. People would think to be earnings would somehow get a tribute to subsidiaries and other countries where they pay little or no tax. The difference is apple and ge and some of the Big Companies are still in this country and they still pay some tax and believe for technical reasons im not sure that i can explain is a lot easier to play the games these companies play if the u. S. Operation was part of a Foreign Company its much easier to play the games and they can take even more money out. So the fact that these companies have decided to stay in the United States is a good thing. I dont give them a free pass on what they do but at least they havent deserted the country and they should get a minor credit for that. Host independent color . Caller i would like to know the situation in puerto rico as far as the Corporate Taxes go. I know many of the companies moved down there several years ago but i think thereve been some changes. I have trouble understanding puerto rican tax and u. S. Tax law. I cant grasp the puerto rican tax law at all. I know about the same that you do that a lot of u. S. Companies have set up subsidiaries and somehow profits that were quite u. S. Profits is a big puerto rican profits into their text in a very low rate or maybe not at all, but that is really all i know. But this has been going on forever. It doesnt mean that its good that its been going on forever. And if you look at the finances in puerto rico, clearly porter rico has picked problems in spite of all of this. But it is a highly different to play in the United States games or intra. But its part of the same operation to move to switzerland or dublin ireland. Its a different thing. Host youre talking with allan sloan of Fortune Magazine about the cover story on the Big Companies coming u. S. Companies that are locating overseas to dodge taxes. In spite of the peace these are the top ten american Corporate Tax avoiders. Take a look at that as we go to roger in glenville minnesota. Independent color. Go ahead. Caller that morning and thank you very much. Youre an interesting man. [laughter] i kind of think youre an easy test. If your company, if all of the Magazine Companies had to pay 75 tax and the workers had to pay 85 tax, what would you do as a company in this country . If we had to pay 112 tax the answer is thats not the situation. And because its not the situation, there is no point in answering your question. Im not going to tell you where i went to school or give you my credentials but if you bother to look up my biography sometime you will see im not an elitist and i dont come for money. Host kind in los angeles, democratic caller. Caller i would like to congratulate you on your staff going abroad. I agree with policies and your statements. I would love to know about these companies on a broad [inaudible] tax monies we need in this country to help bu