I am disappointed in Metronic. They are moving their hq. to avoid paying Minnesota taxes. This is what it means to you and me–we have to pay their share. I don’t care how many jobs will be created and how they and our good Gov. Dayton try to whitewash it. It is still avoiding taxes that are owed to this state. Shame on them.
Another day, another example of a successful American technology company fleeing the punitive corporate taxes here in Obama’s America. This time it’s Medtronic, the worlds largest medical device manufacturer currently based in Minnesota, that is packing up and moving their headquarters to the emerald shores of Ireland.
Via the very left-wing Minnesota Star Tribune:
The word “ironic” may be used too much, but how else do you describe Medtronic moving its headquarters to Ireland so that it will have more capital to invest in the U.S.?
Buying Covidien PLC for $42.9 billion turned out to be Medtronic’s solution to one of its most vexing problems: How does the global medical device maker use its “trapped cash,” the more than $20 billion in earnings from its non-U.S. subsidiaries, without paying a higher U.S. tax rate?
It’s actually trapped by choice, of course, as leaving capital offshore is one of the ways that big companies manage to pay far less in income taxes than the statutory federal rate. Companies would argue that the U.S. tax bite leaves them no real choice.
Another important fact is not only is Medtronc on the hook for an effective 40% corporate tax rate here in the US, as a medical device manufacturer, they are also on the hook for Obama’s 2.3% medical device tax as well.
The federal medical device tax that is an ongoing target for the nation’s medical technology sector, including hundreds of businesses in Minnesota, has apparently survived another attack.
Senate Majority Leader Harry Reid recently refused to allow an amendment that would have suspended collection of the tax for two years to be attached to a bill that extends current tax measures that are set to expire.
The move likely puts off any action that can actually stop collection of the 2.3 percent levy on device sales for months, if not years.
The tax, projected to yield billions of dollars to finance national health care reform over the next decade, has been in the cross hairs of industry lobbyists since its inception. They say it costs jobs and innovation.
Supporters say it is a fair contribution by the device industry to health care reform that could increase business for companies involved in medical technology.
I guess Obama and his henchmen won’t be collecting a medical device tax from the worlds largest medical device manufacturer either. However, in reality, Medtroic’s customers will be the ones receiving the tax break, since businesses ultimately don’t pay taxes. they pass the taxes on to their customers.
The United States needs to seriously need to look at our tax and regulatory structures. If this situation continues, more corporations are going to make the same calculation Medtroic made (US corporate taxes of 40% + 2.3% medical device tax vs. Ireland’s 12.5% corporate tax and no medical device tax) and relocate to a more business friendly climate.