>> c-span to provide live coverage of the u.s. senate floor proceedings and key public policy events. ended we get booktv now for 15 years the only television network devoted to nonfiction books and authors. c-span2 created by the cable tv industry and brought to you as a public service by local cable or satellite provider. watch us in hd, like us on facebook and follow us on twitter. >> just this week burger king announced it was buying canadian company to importance that would move there corporate headquarters to canada for tax purposes. we look into companies that use this tactic to avoid certain taxes. this washington note segment is about 40 minutes. >> host: on wednesday our last hour here, we take a look at recent magazine articles as part of our spotlight on magazine. today the focus of the cover of "fortune" magazine with the

headline positively un-american, big time companies are moving their headquarters overseas to dodge billions in taxes. allan sloan wrote this be. he joins us from new york this one. let's begin with the technical word for how companies do that, do this and that is inversion. what does this mean? >> guest: inversion is a polite way of saying that a company deserts the united states, moves its headquarters to another country, but everything else stays the same as it is. it does much less tax than what if it had not left the united states. >> host: how are companies able to do this? >> guest: because it isn't illegal. what typically happens is that a u.s. company buys a foreign company, you do sort of a reverse transaction where technically the foreign company

buys the u.s. company and what used to be called the allan sloan corporation becomes allan sloan tlc and is incorporated in a different country. nothing changes except the paperwork. >> host: how much does this mean in lost revenue to the treasury? >> guest: nobody knows. it's clearly billions and billions and billions. there was a projection that the joint committee on taxation did that said if these things are not stopped, it would cost $20 billion over the next 10 years, but everyone i talk to including some of the people involved with that said that estimate is way low because it didn't anticipate what's going on now. so the short answer is, nobody knows but it is a lot. >> host: you have it figured in your story. 19.5 billion is what this

committee estimated. you said that's conservative. that's about 2 billion a year. why do you say that is conservative? >> guest: because windows numbers were done, -- when those numbers were done, that was done before this big wave of inversions started. they were just taking a guess on how many companies would invert, if they weren't stopped. they are guess it's clearly low. i think, again, there's no point getting hung up on this number because it's the only number there is and it's too low and it makes no sense to obsess over it. forgiving, $20 billion is a lot of money, but it's even more than i'm worth. i mean, it's just not what it is about. >> host: so why are companies doing this? what has been the trend?

>> guest: they are doing it in order to improve their reported earnings per share, which in theory gets their stock price up. they are doing it to a less taxes to the united states than they would otherwise oh. and a lot of them are now starting to do it because they are afraid the train is leaving the station but they will be legislation if they don't do it now they won't be able to come at all of their competitors are doing it. so it sort of like a land rush in reverse. people used to lineup to come to the united states and established places here and immigrants poured in. now it's the opposite. it's sort of a mass exit of large, very wealthy, very powerful companies that just decided they're going to leave. they do and right now there's really little to stop them. >> host: how many companies are we talking about? give us some names of the

companies. >> guest: okay. most of the names of the people who have left, not names, people though, carmen is a name you know, the gps people. -- garmin. there are also insurance companies, a company called medtronic which is a big medical device company has made a deal to leave. walgreens, which has stores, what, everywhere. they are in the middle of trying to do a deal to leave. pfizer in which is another huge company, tried to leave but that deal blew up for a variety of technical reasons house that we are talking with allan sloan about his cover story, positively un-american, at a time companies that are moving overseas, moving their headquarters to dodge billions in taxes. we want to get your thoughts, your questions.

mr. sloane, looks like your store that also appeared in the "washington post" on sunday is getting some traction. here is the marketplace section this point of "the wall street journal." the president is urging action to limit inversions. the abominate administration joins the growing debate over u.s. companies -- reincorporating overseas, urging lawmakers to pass legislation to limit the moves. what can congress do? what can congress do? >> guest: congress can you actually two things. they can do something very quickly and very simply, which is to pass a certain technical bill that was sponsored by all people, i think the other combination in congress, sander levin in the house and carl levin in the senate. and that changes some of the technicalities that makes it very hard to invert right now. they could do that to stop the

inversions. and then they could do the right thing which is to somehow fix the united states tax code so that it's more attractive for companies to stay here than it is now. and let -- less attractive for them to lead. and with any luck, though i doubt they will do this, some way to throw a harpoon into the companies that have already deserted. i'm sore, invert. i am forgetting i'm not supposed use that word deserter. that is ideally what has happened or i've no idea that will happen but that's what should happen. >> host: i also want to win a fourth line for business owners this morning. want to hear from you as well. join a conversation about the corporate tax rate and these companies moving overseas. allan sloan, you call it positively un-american. why? >> guest: because it is. and again it's not my title to i did not write that line but i love it and i embrace it. it's because the companies that

are deserting the country, they still want to the american, right? they want to have a voice in our politics. they want to benefit from our system. they want to trade their socks in our -- stocks in our market. village of our legal system. they want of our educational system. they want protections like the military. they want their employees children to live in good places and employees to live in good places. so they were all of these things that go with being an american but they just don't want to pay for it. i think that's un-american. >> host: what about their fiduciary responsibility to their shareholders treasure it depends on how you define that. .. how you define that. i do find that as have an obligation to do what is best for the enterprise in the long run. the long run does not mean undermining your country to get the stock price up today.

and alternately undermining the markets where you do a big part of your business. i think that this definition of judiciary duty as get the stock price up today, which is what shareholder value has come to mean, is just nonsensical and a distortion of a valuable concept. it is propaganda. i just don't want any part of it, which is why i wrote what i did. up first in annapolis. republican caller is on the air. thanks foraller: taking my call. i take great issue in what the gentleman just said. i would like the board of directors to do whatever they can to increase shareho should be erected at our tax system. i don't own a corporation that ip personal taxes. i don't even pay at the highest

rate. "the state, the local i'm upwards of 50% and the government is confiscating the property of the very few people in this country that work to pay for the people that don't work and i can see where that corporations are wise to do this. i just wish there was an analog short of giving up one citizenship. first of all a lot of people pay taxes. it would be 47% and not pay anything. that is you would forgive me me, nonsense and i abide away in a registered buffing. i'm not a democrat. i am a registered me. i don't take sides in any of

this but i do know how to count and my retirement and most of my net worth is in the united states stock and i don't want the companies to do this. do you want your companies to do that? i don't want my companies to do that. i don't buy the argument does make the company better or the economy better. it ought to be fixed and it annoys me but to protest over the fact i don't like the tax system i stay here and fight for what i think is right and that is what i suggest you do. you sound like someone that knows how to fight. go to it. >> host: democratic caller in virginia. >> caller: good morning. this is just something i've

noticed over the last 30 years or so and unfortunately the reality is america has become nothing but a business where no one seems to really care about the goodness of our fellow citizens in the country. it's all about greed and the here and now and unfortunately even if the republicans in congress believed we needed to do this to stop the appropriations to take their campaign money and they are never going to do anything to stop this just the fact that obama would support it means that they would not do it. we have problems with the gerrymandering and our system is broke and i don't have an answer but i would say keep fighting. thank you. >> host: the caller implies that congress doing anything

other is stopping vm versions of overall tax reform isn't going to happen. so if it isn't going to happen why would these companies be leaving? >> guest: we don't know what's going to happen. now again the companies are willing to do this. i don't think they are evil. i think they are misguided. i think they are wrong but if you really be leave that you have to do this, well what you and i think will happen doesn't determine what will happen. it's just not how things are. i think it is unfortunate that this has gotten to be politicized because i think it guarantees that little is likely to have them. i think that is a very bad thing. for a while i thought this might actually get fixed and it might

still get fixed. people might surprise us because i've been reporting about this now for a while and have had any number of conversations one-on-one with people on different sides and they are not really all that far apart on substance. the question is whether they can sort of suck it up and deal with this over what will be immense lobbying to do nothing and to get something done. i mean, if i weren't an optimist i wouldn't do what i do for a living. i would still go sit in my cellar. i want to think that something could happen and i want to think that maybe some of the core and possibly my articles and possibly your shows can help people do the right thing. >> host: to companies say they might be motivated because the time is now. what do you mean by that? what was accomplished eight at?

>> guest: any sort of rules and who knows what regulation the white house or the treasury might dream up to throw into the mix. it's very technical. i don't pretend to understand the technicalities. i understand the end results. i don't understand the tax but if you think you have this obligation to do it, you better do it now because it is easier to do it now. >> host: phillipa nashville tennessee. >> caller: thanks for this subject. i would sort of like to ask for numbers you started to show off what is that on top of the court warrant tax cuts of the

republicans and the democrats and the bush tax cuts? the second part of it is the money that is shipped over there over the american tax bucket do you think that it would be equal to the announced that we are indexed to? i think that the national debt is the amount that they are taken from it. i say that because it seems that about every month they are giving banks truly intend trillions of dollars and the average person -- >> host: mr. sloan? >> guest: i didn't hear the previous show that what we are supposed to talk about that i have been to note is that several years ago i sat down to

figure out how much the bailouts of the financial institutions had caught the u.s. treasury and much to my surprise, i discovered the treasury had actually made money on them. not a tremendous amount of money but the rich that was involved and the amount of money that was involved in at the treasury came out ahead. so i'm not sure that i understand the question but i'm answering it as best i can. >> host: the money that is going elsewhere in the united states and the companies not paying in the treasury is the equivalent of our national debt? could that help pay down the national debt? >> guest: what is it, $16 trillion. that's more than the corporate profits for the whole world. to the extent that the treasury is collecting i think it ought

to because the companies have adverted that increases the deficit and the debt but it's not enough to explain the national debt. it can't even be remotely close. it's just not possible. >> host: independent call. >> caller: i'm not i not anti-communist either but i feel our system is dependent on keeping the middle-class working if the people that have the money don't invest enough in to pay enough taxes however you get it from them to keep the middle-class working in our system doesn't work because the middle class pays the bills for the rich and the poor. >> host: what about that sentiment? >> guest: i agree we have to have a middle-class and for heaven sakes i'm part of it so probably the upper part of the middle-class but i wish people pay something. maybe they don't pay as much as people think they should but if you look at the numbers people with very high incomes pay a lot

of tax. the middle class is shrinking for a million different reasons and it's a terrible thing and it's a problem. there's no question about it. but the thing is and what's causing that problem. it's caused by a million other factors. >> host: what about the corporate tax rate? 35% is that the problem? >> guest: may be. it's one of these things where 25 years ago when i'm sorry, 28 years ago 1986 it was cut from 46% to 34% and debated handstands and were foretold everything is great. they lowered the rate and broadened the base and in about 12 seconds people began looking for loopholes and then the world changed and now you have countries all over the world

with lower rates than ours that are basically trying to drive the companies to go there because whatever revenue they get from the company is money to them and hear they've lost money for us. so again in the ideal world the rates would be lower than 35% and you would eliminate many of the loopholes and you would make it very difficult in a million technical ways that i do not pretend to be able to understand or explain for the companies to invert. that's what we ought to do. i don't know that we are going to do that or that we are going to do it in time to capture a part of the companies lining up to leave but that's clearly what we ought to do. >> host: what is the difference between a company that invert and a company like apple and ge that siphon off the earnings out of the united states? >> guest: that's the question

we asked ourselves when i was putting this article together because ge and apple into and some of the big tech companies are the victorious for taking what u.s. people would think to be earnings would somehow get a tribute to subsidiaries and other countries where they pay little or no tax. the difference is apple and ge and some of the big companies are still in this country and they still pay some tax and believe for technical reasons i'm not sure that i can explain is a lot easier to play the games these companies play if the u.s. operation was part of a foreign company it's much easier to play the games and they can take even more money out. so the fact that these companies have decided to stay in the united states is a good thing.

i don't give them a free pass on what they do but at least they haven't deserted the country and they should get a minor credit for that. >> host: independent color? >> caller: i would like to know the situation in puerto rico as far as the corporate taxes go. i know many of the companies moved down there several years ago but i think there've been some changes. >> i have trouble understanding puerto rican tax and u.s. tax law. i can't grasp the puerto rican tax law at all. i know about the same that you do that a lot of u.s. companies have set up subsidiaries and somehow profits that were quite u.s. profits is a big puerto rican profits into their text in a very low rate or maybe not at all, but that is really all i

know. but this has been going on forever. it doesn't mean that it's good that it's been going on forever. and if you look at the finances in puerto rico, clearly porter rico has picked problems in spite of all of this. but it is a highly different to play in the united states games or intra. but it's part of the same operation to move to switzerland or dublin ireland. it's a different thing. >> host: you're talking with allan sloan of "fortune magazine" about the cover story on the big companies coming u.s. companies that are locating overseas to dodge taxes. in spite of the peace these are the top ten american corporate tax avoiders. take a look at that as we go to roger in glenville minnesota. independent color. go ahead. >> caller: that morning and thank you very much.

you're an interesting man. [laughter] i kind of think you're an easy test. if your company, if all of the magazine companies had to pay 75% tax and the workers had to pay 85% tax, what would you do as a company in this country? >> if we had to pay 112% tax the answer is that's not the situation. and because it's not the situation, there is no point in answering your question. i'm not going to tell you where i went to school or give you my credentials but if you bother to look up my biography sometime

you will see i'm not an elitist and i don't come for money. >> host: kind in los angeles, democratic caller. >> caller: i would like to congratulate you on your staff going abroad. i agree with policies and your statements. i would love to know about these companies on a broad [inaudible] tax monies we need in this country to help build us and keep us going. and another thing is that they say they want you to afford protection and all of the amenities of this country has to offer yet still they want to take the jobs into the money to other countries and help build the infrastructure and employee other people in other countries.

i don't know what can be done about it but i just wanted to call and get your stance on it and i do agree. >> host: what can be sec do about it? disco i have no idea what they can do or whether it is their job. it's the job really if congress to deal with this. and i hope someday they manage to actually grow up and do something instead of running around posturing and shrieking at each other and giving attack ads. >> host: what is the excise tax and if that's not a deterrent? >> guest: this is going to be complicated so please bear with me. when a company adverts it is treated as a sale as if the company were sold and if you own stock in the company and the

stock is selling what you pay for it is taxable to you. however, if you have stock options which is the right to buy stock for the fifth period were stock that is something you may guess that don't have doubt you would end over the attacks on us because you don't go it but there's a special provision in the wall that says if you are a director or a top executive you have to pay a 15% excise tax on the value of your stock options and value of your restricted shares and that would design to be to stop the companies from doing this. however, nobody thought to write into this legislation. the band on companies making the directors and executives hold for the tax they have to pay and

then giving the money to pay the tax on the tax subsidy payment to take it and i got this to some extent in my article and i was estimating i'm sure to load this would cause ultimately $60 billion at picking up the tab for its executives and directors of excise tax and that's what this is. it seemed like a great ideal but it just doesn't work. >> host: charlie in arkansas independent colors. >> caller: my question i just wanted to say [inaudible] >> host: bobby in knoxville tennessee. good morning. >> caller: good morning. thanks for taking my call. i just have a couple of comments

really. it's my opinion that the american companies leaving his isn't that the problem not a problem in and of itself. the problem i would say is historically un-american tax policies that we currently have. historically, nonsense from 1913 but historically going back to the founding of the country that would be my assertion. and also, if americans acting in response to what they perceive as excessive taxation is acting in an un-american way i would suppose he would also have to describe the founders of the country and the broader revolutionary war as being un-american as well. >> guest: i don't mean to insult you and i don't think you mean to insult me which i hope you don't.

this is just propaganda. when you have individuals who don't pay income tax and benefits for being americans and having those programs you probably call them takers as opposed to me and you who pay taxes. companies do the same thing. if a company is going to benefit the united states it off to pay for it. it ought not be able to decide it doesn't want to pay for it and go offshore and then continue to get all the benefits it would get including many of the cases of these companies one of the biggest companies is the federal government for heaven sakes so they are happy to do business with the federal government, they just don't want to have to pay taxes. and i know minimizing taxes is the american way. but this stampede out of the country by the companies in the

last few years and especially now is a whole new phenomenon that dates back to the revolution. this doesn't date back to 1913. this is only a few-years-old. and i don't like it and you shouldn't like it. >> host: robert is watching on the democrats line. go ahead, robert. you don't seem to be one of the 99%. i am 58-years-old and when i was facing the draft of 73 my mom wanted to keep me from going to vietnam. those people that did, they were anti-american. i would like to hear a man that

represents the industry and the big business and i appreciate that. tell me where you stand should these people, should these corporations be prosecuted for being anti-american, do you think that occupy wall street could find some other solution? where do you fit in that sliding scale flex >> guest: first, i'm flattered that you think i'm in the 1%. i have to commend my wife. i'm not in the 1% and i don't represent corporate america. i work in a magazine that writes about corporate america i don't represent corporate america. and everything bees companies are doing is legal. there is no reason to prosecute them. what we need to do is change the law and change the incentives. that's what needs to be done. it's the idea that it's something we don't like or

someone should go to jail. i supposed that for years and made myself very unpopular in a lot of places by saying here we have this financial meltdown. why isn't anyone going to jail and i say stupidity is not a crime. incompetence is not a crime. and for the induction into the military for vietnam i feel that the induction physical. so i didn't go offshore. i stayed here even though heaven knows i didn't want to go fight in viacom. but i did my duty were my reporting and i got lucky. so this is my idea of how you handle these things. i've been following the story

and it's been a keen interest. one of the ways the whole issue can be mitigated is that we start taxing people who are in their income on capital gains and dividends for their rates tied to the median family income if you make over $50,000 on the capital gains and dividends and if you earned income rates most of the people that are benefiting from this article who made their money by capital gains and dividends. please comment. he deals with corporations all the time and i who am as close as you can find among the ranks of the people who were the opposite, we re-signed to fix

the economy and the tax system. one of the things we decided to do with the two proposed that capital gains be created just like any other kind of income and that would eliminate your problem coverage is it's it software investments export leader. everything you're saying becomes much more simpler. >> host: mark republican caller. >> caller: i wanted to ask you isn't this a race to the bottom if we cut our corporate taxes, want another country could they are corporate taxes? and then we see who can hit the lowest rate of the quickest. >> host: i thought you were done at this point.

if you find the version of the article and i assumed this assume this was in the "washington post" version also i mentioned this very problem. of course it's a problem. and it can't be done. >> host: cathleen dayton ohio. democratic collar. >> caller: you've been talking about the corporations. i want to ask you from what i've seen in the manufacturing area of dayton ohio it's been a mass exodus from down south to mexico and for 40 years to talk about this increase and the u.s. terrace and how you have to call it in version and also talk about comparing the u.s. tax system is to say for instance germany and not china. is the corporate tax that high in the u.s. compared to other

western nations versus paper instance china? >> guest: the first thing about china is given the air and the water and all that, i don't think that the top executives are lining up to move themselves to china. they don't want to go there. it's higher than all of our competitors except i think japan and germany is fairly high also. but you can set yourself up relatively easy and get the rate is extremely low and you can negotiate with the particular which is the equivalent of a state. you can sort of negotiate a deal there and you can apparently negotiate a deal in england.

in ireland at that rate the rate is 12.5%. and as opposed to 35. and i think that you can probably do better if you bargain with somebody in ireland. it's just very high. it doesn't seem high at the time and it's probably lower than my tax rate on each additional dollar that i pay but it's high competitively. >> host: let's get one more phone call if we can in crystal lake illinois. make it quick the house is about to come in for morning session. >> caller: i think they should lose their patent rink they shod lose their patent rates. >> guest: well, you know, who knows. we ought to do something to paralyze them.

that sounds like as good as anything but i don't know enough about it to have an informed opinion. i only have the opinion out of my gut. >> host: what is the role if you can because the house is about to walk in. >> guest: the s&p 500 index is the important index because something like ten or 12 or 14% of all ownership of these -- during stocks are index funds that used to throw you out of the index if the company moves out of the united states. but in 2010 for the perfectly understandable competitive reasons, they changed their policy and you could still be an american company even if you believe which means that it doesn't get a big hit. >> host: i hate to cut you off like that but thank you for your time this morning. the cover story. thank you very much.

>> join. >> join us tomorrow

they want to turn it into cheyenne and blackfoot and the crow. they want to turn them into christian farmers. sitting bull isn't about to bend over and scratch and claw at the ground with a hoe to try to make a living. and crazy horse isn't going to surrender his pony and hook it up to a plow. they are hunters and lawyers and

that their vision. folks in the mid-70s there is economic crisis. the stock market crashes, the banking system rolls over, the panic of 1873 people are losing their jobs, their life savings. there is 20% unemployment. any of that window? it's tough times in america. ulysses s. grant as the president of the united states and he's going to have to read up the economy or he's not going to get re- elected. he needs an economic stimulus package. and george custer is going to provide it. gold in the black hills. in december of 74 the summer of 74 he leads an expedition into the black hills of south dakota. the rumors of gold persisted for years but now is a reality. there is gold in the black hills. the paper reports that all you have to do this walk through the grass and pick up the nuggets off the top of the shoes. minors, prospectors, onto