Here’s What You Need to Know About Tax Inversions: Almost Nothing

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I guess that corporate tax inversions are slated to be the topic of the week. This is the maneuver in which a corporation buys a company overseas and then transfers its headquarters to the new country, where tax rates are lower. Voila! A lower tax bill:

Dozens of additional deals are in the works, according to administration and congressional officials, and other companies are quietly contemplating the move. Last month, CVS Caremark chief executive Larry Merlo met with Sen. Charles E. Schumer (D-N.Y.) and urged him to act to stop the rash of expatriations. Otherwise, Schumer said that Merlo warned him, CVS “might be forced to do it, too,” to duck a total tax bill expected this year to approach 40 percent.

“There’s a huge number coming,” Schumer said in an interview. “We hear there are going to be several big announcements in August.”….The potential costs to the U.S. treasury are enormous. One measure, by the congressional Joint Committee on Taxation (JCT), suggests that the nation stands to lose nearly $20 billion in tax revenue over the next decade. Former JCT director Edward Kleinbard said he thinks the potential loss is much higher.

“My guess is they didn’t fully reflect the sharknado of inversions that is about to happen,” said Kleinbard, a law professor at the University of Southern California.

This whole issue is maddening in the usual way. As it happens, both Democrats and Republicans agree that this problem needs to be fixed, but in approximately the same way that Israelis and Palestinians both “agree” that war in the Middle East needs to be fixed. President Obama proposed a corporate tax overhaul years ago, followed by a more targeted proposal back in March, but they’ve gone nowhere because Republicans want a net tax cut. Republicans, for their part, have proposed wide-ranging tax reform, but the prospect of getting the current Congress to agree on wide-ranging tax reform is laughable. Hell, they can’t even agree on a tiny, focused bill to fix the border crisis.

So now Democrats are pushing Obama to fix the problem administratively, and Republicans in turn are yelling “tyranny!” And that’s where we stand. It’s all very edifying.

This post is not an “explainer.” I have deliberately left out every single relevant detail because none of them matter. Republicans want net taxes on corporations to go down, and Democrats want them to stay the same. Ne’er the twain shall meet, and that’s pretty much all you need to know. But it did give me a chance to quote an eminent law professor using the word sharknado.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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