MINNEAPOLIS (WCCO) — News last week that Medtronic is buying an Irish firm and moving its headquarters to that country is prompting debate here in Minnesota and across the country.
Medtronic says it needs to make the move so that millions of dollars of overseas profits can be taxed at a lower rate. That has members of Congress asking if it’s time to either change the tax code or make it harder for companies to make this kind of a move.
Medtronic is essentially saying it has to move to Ireland so it can have more money to invest in the United States. Medtronic has structured its U.S. operations so it pays a lot less than the 35 percent corporate tax rate.
Medtronic pays about 18 percent. But its overseas profits would still be taxed at 35 percent if the company tried to bring that money back to the U.S.
Medtronic is not the only company that has either made or is considering this type of a move and the President and some members of Congress are proposing legislation that would bar companies from making this type of deal. Other members of Congress say this is a clear example of why an overhaul of the U.S. tax code is needed.
Minnesota Congressman Erik Paulsen is a member of the House Committee on Ways and Means, which oversees US tax policy. He appeared on WCCO Sunday Morning.
“It clearly shows we need to fix a broken tax code. There are two issues here. The United States has the highest corporate rate in the industrialized world and two, we charge a toll and a penalty for any companies that sell to their customers overseas. If they want to bring those earnings home we penalize and we charge a toll on those earnings. Other countries don’t do that and as a result we are seeing those companies move overseas,” Paulsen said.
The deal between Metronic and Covidien is expected to be completed later this year. But the merger agreement says either company can call off the deal if Congress changes regulations or tax policy.
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