Here’s a fun exercise: grab a beer out of your fridge. Take a look at the label to see where it’s brewed.
Now, hop online and look up who owns the brewery.
You might be surprised to learn that your favorite brew is foreign-owned. Indeed, roughly 90 percent of the beer made in America today is produced by foreign-owned firms, and that number is likely to rise in years to come.
How could this be?
The reason is quite simple: the U.S. tax code. This week, Jim Koch, founder of the Boston Beer Company, explained the situation in plain terms to a Senate subcommittee:
“We are vulnerable because we currently report all of our income in the United States and pay a tax rate of about 38 percent on that income… Because of our broken corporate tax system, I can honestly say that I will likely be the last American owner of the Boston Beer Company.”
If the Boston Beer Company – home to Sam Adams – were foreign-owned, it would pay an effective tax rate between 25 and 30 percent. We’re talking tens of millions of dollars in savings per year.
The United States has the highest corporate tax rate in the world. As a result, foreign takeovers of American firms have reached an all-time high, totaling $275 billion last year (the number could reach $400 billion this year).
With that kind of money, you could buy more than 3,000 PBRs for your 1,000 closest friends every day for the rest of their lives.
And almost every time a foreign firm acquires an American business, Americans lose jobs. For example: Belgium-based InBev purchased Anheuser Busch in 2008. Since the acquisition, the company has lowered its American workforce from 18,000 to 13,000.
Quite literally all of this could be avoided if the United States reformed its corporate tax code, setting rates in line with the rest of the developed world. In an increasingly competitive international marketplace, shouldn’t America be able to compete without having one arm tied behind her back?
What do you think? Should American businesses have to pay the world’s highest tax rates, crippling their ability to compete with increasingly ambitious international competitors? Or should we give our companies – and their workers – a fighting chance? Give it some more thought on our Facebook page.