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Political Diary
August 3, 2008
This Bud's for Belgium
Politicians and Wall Streeters are starting to ask why the Belgian beer
company InBev purchased Anheuser-Busch and not the other way around.
Anheuser-Busch is an iconic American firm and some find it almost
unpatriotic that Anheuser CEO August Busch IV allowed the "King of Beers"
to relocate across the Atlantic -- though shareholders were the big
winners here with a $50 billion-plus takeaway.
But 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%%.
