>>>
http://online.wsj.com/article/SB121770579562707543.html?
>>> mod=djemEditorialPage
>>>
>>>
>>> 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%%.
>>>
>>> Things have gotten pretty bad when U.S. companies relocate to Europe to
>>> cut their tax payments. But 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.
>>>
>>> So while John McCain may have benefited from his wife's ownership of
>>> Anheuser stock (estimated at between 40,000 and 80,000 shares), the
>>> country will continue to see its competitive edge wither away without a
>>> corporate tax rate cut. Mr. McCain to his credit wants to cut the
>>> corporate tax rate to 25%%, close to the global average. Senator Obama is
>>> more interested in raising tax rates than cutting them.
>>>
>>> Wall Street dealmakers tell us to expect more sales of U.S. companies to
>>> European rivals thanks to the combination of America's higher corporate
>>> taxes and the weak dollar. They're right. New data from the OECD for 2008
>>> indicate that the international average for corporate tax rates fell by
>>> another percentage point last year, meaning the U.S. is pricing itself
>>> out of the market as a corporate headquarters. "America's 35%% corporate
>>> tax rate is not just bad economics, it's downright unpatriotic," says tax
>>> expert Kevin Hassett of the American Enterprise Institute.
>>>
>>> -- Stephen Moore and Tyler Grimm
