Sam Adam’s Sons of Liberty, who dumped tea in the Boston Harbor to protest the 1773 Tea Act, would be dismayed to learn that U.S. companies are now pulling up stakes to head for the United Kingdom (U.K.) to escape increasingly burdensome domestic corporate taxes.
News broke yesterday that IHS, a Colorado-based information and analytic company, would be merging with Markit, a financial market data provider located in London, where the new headquarters will be housed under the new name IHS Markit. USA Today reported that the move could “achieve $125 million in cost savings by the end of 2019.”
This is just the latest big name move to greener pastures, following close on the heels of Pfizer, Burger King, and Medtronic to name a few, taking with them high quality jobs.
A 2014 report from the Tax Foundation on the U.K.’s corporate tax reform efforts, explains the new appeal of Mother England. The report describes how after finding their 28 percent corporate tax rate (down from 52 percent in 1980) to no longer be competitive in the global marketplace and confronted with a migration of British companies, the U.K. “implemented both a territorial tax system and a series of corporate tax reforms” that lowered the corporate tax rate to 20 percent, far below our own 39.1 percent, the highest in the developed world. The U.K.’s reforms have attracted the attention of numerous U.S. corporations including Coca-Cola Enterprises, a “major Coca-Cola bottler.”
Congress should take steps to improve our increasingly toxic business climate to discourage additional businesses from leaving the states to avoid the taxman. Following the U.K.’s lead, we should act quickly to lower the corporate tax rate and move to a territorial tax system. Likewise, rolling back costly regulations and repealing the death tax would be a major boost for both large and small businesses. As economic indicators point to a pending downturn in our already sluggish economy, we need real reforms to make the U.S. once again a destination for much-needed jobs and investment.