Corporate Inversions And Fair Play

Abstract

A Corporate inversion is a process that a company undergoes to change the domicile of the parent corporation in a multinational corporate conglomerate to a country other than the United States. J. S. Barry (2002) quotes U.S. Senator Max Baucus, Chairman of the Senate Finance Committee, as saying: "Prominent U.S. companies are literally re-incorporating in off-shore tax havens in order to avoid U.S. taxes. They are, in effect, renouncing their U.S. citizenship to cut their tax bill. This is very troubling, especially now, as we all try to pull together as a nation." Senator Charles Grassley (R-Iowa), the ranking Republican member of the Finance Committee, has called inversions "immoral." Stanley Works, a corporation based in Connecticut, planned to re-incorporate in Bermuda. A Democratic Representative from that state, James Maloney, said, "Connecticut hasn't seen such a shameful day since Benedict Arnold sailed away." Stanley Works buckled under political pressure and did not go forward with the planned inversion. This paper addresses the current practice of corporate inversions, and reviews the current legal and political actions taken to address them.