Saturday, January 30, 2016
The World of Inversions
The world is being turned upside-down and inside-out in the world of politics, as well as the worlds of business and health care.
The act of inversion is to reverse positions, directions, or relationships, to turn inside-out, or upside-down, or topsy-turvy
In politics, Donald Trump and the Bernie Sanders lead the inversion list. Suddenly, Trump, a businessman with no direct, inside political experience, and Sanders, a long-avowed Democratic Socialist with 25 years in Congress, but also no political insider, are suddenly leading their respective political parties. Both are political outsiders leading “revolutions,” and new political merry-go-rounds, whether they will stop nobody knows. Trump appeals to lower and middle class working voters, who have tired and suffered from economic slow growth and unfulfilled government promises, and Sanders attracts the young, idealistic, and the liberal elite, who believe in or seek government largesse and power using other people’s money.
In business, inversion goes by the name of tax inversions, whereby corporations relocate their headquarters in a lower tax nation, or corporate haven , while maintaining their operations in the higher tax nation. This is often done by acquiring a company in the lower tax nation. In the $100 billion dollar Pfizer-Allergen deal, Pzifer would lower its overall-tax burden from 25% tp 17%, saving $1 billion in the process. Fifty one companies have done tax inversions, including Tyco International, Pfizer, Medtronic, and Burger King, and other big companies are considering tax inversion. The driving force is the punitive U.S. corporate income tax, which, at 35%, and effectively 39%, is the highest in the world. For most companies, the favored corporate havens are Ireland, the U.K, Jamaica, or elsewhere in the Carribean, and in the case of Burger King, Canada.
With health care, pharmaceutical companies and health care corporations favor Ireland as a haven. With hospitals, physicians, and consumers the inversions are relocations to a different site or a different way of practice within the U.S. Hospitals seek markets and switches of operating sites outside the hospitals, often in acquired physician practices and generally in the suburbs or regions or states in which they dominate. Physicians tend to convert traditional practices to direct, cash-only practices, outside the reach or participation in 3rd party government or insurance programs. As for consumers, who can no longer afford high premiums or deductibles, the inversion targets are home care, direct cash practices, self-care, or reliance on the Internet for information and self-monitoring devices. One side prides itself on following the dictates of its conscience and its moral imperatives, other on its common sense and its state of economic despair.