Tuesday, 5 August 2008

A-B/InBev a Result of Corporate Taxes?

The Wall Street Journal's Political Diary blames InBev's acquisition of Anheuser-Busch on corporate income taxes:
...here's the real question: Was the takeover basically financed by the savings Anheuser expected from escaping America's increasingly uncompetitive corporate tax system? According to the Tax Foundation, Belgium's corporate tax rate is 33%, but the effective tax rate can be half the nominal rate thanks to adjustments for something the OECD calls a "notional allowance for corporate equity." Bottom line: InBev was paying around 20% of its profits in corporate taxes, compared to Anheuser-Busch's rate of 38.4%... a research analysis by Morgan Stanley finds the combined company's corporate tax bill will be lower than in the U.S. and that the tax differential indeed figured into the economics of the sale.
InBev did promise to make A-B more profitable... is this one of the ways in which they'll accomplish it?

1 comment:

Douglas said...

surprise surprise. Combination of death taxes and a corporate tax rate far in excess of that in most of the world will continue to force sales and encourage American companies to move off shore. Anyone who thinks that increasing taxes is good for the economy, employment, oil exploration and production, or whatever, is a fool.