Carl Icahn is urging lawmakers in the United States to pass measures that encourage American corporations to return foreign profits to the United States. The measures would supposedly help the Internal Revenue Service, which according to the billionaire investor, has been hurt by business loopholes that help American companies to avoid paying taxes in the United States.
Icahn wants action to take place quickly.
“Many big companies in the next year or two are planning on moving out of this country,” he said.
Icahn is suggesting a tax of 7% to 15% against abroad American corporations. Such a tax would bring more than $2 trillion to American soil. This money is currently being held by American companies in foreign countries.
But perhaps most importantly, taking this action would help stop companies from relocating their headquarters to countries with lower rates of taxation.
Multinationals of the United States have been lobbying for a tax deal of this nature for a long time. They say that it would make the reinvestment of foreign profits in America more affordable.
Meanwhile, the phenomenon of American companies relocating to more tax-friendly countries is a growing trend. For instance, Burger King acquired Tim Hortons of Canada. The burger chain then renamed its parent corporation “Restaurant Brands International Inc.”, and it relocated to Oakville, Ontario in order to take advantage of Canadian tax laws.
For now, Icahn is adamant that action needs to be taken quickly.
“I’ve already talked to people on this, I’ve been advocating for it. It’s insane almost not to do it. Get the $2 trillion back here to our economy, and lessen the real threat that a lot of companies will move out of this country,” he said.
Additionally, Icahn is also angered by the “carried-interest discount” in which profits earned by hedge fund managers are taxed at reduced income rates.
“One obvious problem the government should have fixed a long time ago is the carried-interest tax loophole. People on Wall Street, they’re good friends of mine, I like them, but not having to pay full taxes on money that you’re earning is an absurdity,” added Icahn.
Icahn is blaming the problem on politicians.
“These guys that run this money don’t take any risk, they only make the profit. Okay, good for them. They raised the money; they take a profit. That doesn’t mean they should pay a lower rate than a regular person. The middle class guy who’s making the $50,000 a year realizes, ‘I’m being taken advantage of.’ He can read, he can understand.”