became the latest pair of companies to consider a high-value
merger. One of the big motivations for these international
mergers is the opportunity to do a tax inversion. But what
exactly is a tax inversion, and why have they become so
In the following video, Dan Caplinger, The Motley Fool's
director of investment planning, looks at tax inversions and the
big rise in their popularity. Dan notes that U.S. corporate tax
rates are high, with rates of 35% being much higher than in other
areas. Tax inversions allow companies to shift their tax home to
a foreign country where taxes are lower, and estimates suggest
that the new wave of tax inversions costs the IRS about $2
billion annually in lost taxes. Dan points out that Congress has
made it harder for companies to do tax inversions, but the
limitations on minimum size for international target companies
has led to megamerger proposals like
and its now-ended bid to buy
. As long as taxes in the U.S. remain high, there'll be plenty of
incentive to do tax inversions.
Take advantage of this little-known
Recent tax increases have affected nearly every American
taxpayer. But with the right planning, you can take steps to
take control of your taxes and potentially even lower your tax
bill. In our brand-new special report "
The IRS Is Daring You to Make This Investment
The IRS Is Daring You to Make This Investment Now!," you'll
learn about the simple strategy to take advantage of a
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help you cut taxes for decades to come.
Click here to learn more.
has no position in any stocks mentioned. The Motley Fool
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