Mark Cuban Attacks Tax Inversion Companies

By: Mike Tuttle - August 5, 2014

Billionaire Mark Cuban didn’t get where he is today by not thinking things through from all angles before making a decision. So when he took to Twitter and threw down the gauntlet on U.S. corporations that are taking their tax base off shore, he was all studied up and ready to fight.

At issue is something called “tax inversions”. Essentially, this is when a U.S. company acquires a foreign company, then moves its tax base overseas to enjoy lower tax rates.

Now most corporate heads will tell you that it is their responsibility as executives to keep an eye on company profitability. There may be an argument to be made about whether today’s CEOs think about the future much when making decisions, as opposed to looking at just the next fiscal quarter. But most understand that a CEO is there to make shareholders money.

Part of running a business is about reducing expenses, including taxes. The U.S. tax code has built into it lots of ways for people and companies to reduce or even eliminate their tax burden legally. There are also plenty of illegal ways to do it. If a CEO can reduce his company’s taxes as far as possible, and still be on the right side of the law and the ethics demanded of him by his company, that is his mandate.

But Cuban says that companies taking advantage of these “tax inversion” methods are bad for the U.S. And furthermore, he has put them on notice:

Cuban went on to explain himself and his line of logic.

His logic seems sound enough. As a shareholder in a company that moves its tax base outside the U.S., he may stand to gain from that company. But as a taxpayer, he and the rest of us now have to make up for that company’s missing tax revenue.

If a company reduced its tax burden via legal means right here in the U.S., those legal means balance the loss of the revenue because they are based in other pluses for the U.S. economy, such as investment and development. But to move away and put nothing back into the system is not the same thing.

Image via YouTube

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Mike TuttleWriter. Google+ Writer for WebProNews.

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  • john

    no question he’s right. He usually is on most everything. Listen to his reasoning on shark tank and you’ll know what I mean. Real savvy and smart investor and company owner

  • dude1394

    No one really cares what you do with your stock cubes. Also no one is telling you how to run your businesses, mind your own.
    The us corporate tax system is stupid, spend some time changing it instead.