Mark Cuban, the outspoken billionaire entrepreneur who owns the Dallas Mavericks and stars on the reality TV show “Shark Tank,” has weighed in on the increasingly controversial issue of corporate inversions with a series of tweets.
On Cuban’s Twitter page, he wrote Friday, “If I own stock in your company and you move offshore for tax reasons I'm selling your stock. There are enough investment choices here.”
Cuban continued, “If you talk to me as a shareholder and ask me to accept a higher PE so you can save jobs I'm open to it. The risk doesn't leave the system.” He then added, “Shareholder value should increase my net worth. Reduced tax receipts get paid by me and you elsewhere.”
Cuban soon tweeted, “When companies move off shore to save on taxes, you and I make up the tax shortfall elsewhere. Sell those stocks and they won't move.”
“Look at your portfolio holistically,” he then advised. ”A corp move may push up the stock. it may push up your taxes Taxes r forever.”
Cuban asked, “Are you willing to call your broker or fund and tell them to sell companies that increase your tax bill by moving overseas?”
“Make sure to check the tax consequences of selling before you make a decision,” he advised. He then linked to a story on The Wall Street Journal summarizing his tweets,
President Obama, Treasury Secretary Jack Lew and members of Congress have been discussing the increasing trend of U.S. companies merging with companies in low-tax countries in order to lower their tax rates (see Obama Says Tax Law Must Change to Stop Corporate Deserters’ and Treasury Secretary Lew Hopes to Prevent Further Corporate Inversion Tax Deals). Congress held a hearing this week on the matter and is considering legislation to curtail the practice (see Hatch’s Conditions on Inversion Law Spotlight Partisan Gap and Congress Casts Aspersions on Corporate Inversions).
On Thursday, Obama accused companies of being “corporate deserters who renounce their citizenship to shield profits.”
“You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers,” Obama said.
Among the companies with inversion deals in the works are AbbVie, Medtronic, Mylan, Auxilium Pharmaceuticals, Chiquita Brands International, Horizon Pharma, Applied Materials and Salix Pharmaceuticals.
Democratic lawmakers in Congress have pushed to discourage inversions, with Sen. Carl Levin, D-Mich., having introduced a bill in May called the Stop Corporate Inversion Act of 2014.
International tax attorney Charles Kolstad of Venable LLP in Los Angeles doubts that such legislation will pass before the November elections, however. “The problem with tax reform is it requires both sides of the House to get together and act, and that’s been difficult of late,” he said in an interview Thursday. “It’s not quite clear that any legislation that gets proposed has any real chance of being passed in the near-term future until after the midterm elections in November, and perhaps some shifts in the balance of power.”
He sees the current debate as “political arm twisting.”
“If you can’t pass legislation and you can’t pack it through regulations issued by the IRS, what are you left with?” Kolstad asked. “You’re left with trying to convince people that it’s not appropriate, not patriotic, whatever. The problem is, if you’re the CEO of a large company and you have a shareholder base who worries about stock prices, you worry about international competitiveness, and you’re sort of forced to do it because that’s what is in the best interests economically for your shareholders.”