This quarter has been
incredibly successful for companies both large and small, which can in part be
attributed to smart investments, strategic internal operations, and support
from investors. Somewhat surprisingly, some of the success might also have been
garnered through overseas inversion deals, which allow big businesses to avoid some U.S. taxes.
As more and more companies have come out with reports detailing a markedly
successful second quarters, lawmakers find themselves at odds with how to
approach tax reform.
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| Kenneth Jacobs, CEO of Lazard Ltd. Image: Lazard |
According to The
Wall Street Journal, “Lazard
Ltd. said its second-quarter profit more than doubled, paced by record revenue
from its asset-management arm and gains in merger-advisory fees,” of one
company that welcomed record profits this quarter. Lazard’s chief executive
Kenneth Jacobs attributes the company’s success to its fixed-income holdings,
its revenue from financial advisory, as well as an overall “market rally.”
Additional causation for
immense second quarter success for many companies lies in overseas inversion
deals. According to The Wall Street
Journal’s Justin Baer and Michael Calia, who spoke with Jacobs recently
about Lazard’s quarterly earnings, “Mr. Jacobs predicted a recently flurry of
‘inversion’ deals by health-care companies and other businesses that allow them
to reincorporate overseas, avoiding some U.S. taxes, could spur lawmakers to
act.” As Jacobs notes, “The more inversions and the more visibility on
inversions, the more likelihood it is that we’re going to get some kind of
reaction out of congress over the course of the next couple of years,” of the
stance that policymakers are beginning to form on this issue.
Jacobs’ prediction supports another recent report from The Wall Street Journal, in
which John Mckinnon explains that many companies aren’t waiting for congress to
make up its mind about corporate taxation, and are already taking their
business overseas. “A lot more American firms could wind up moving overseas for
tax purposes before Washington manages to do anything about the problem,
despite new pressure from the Obama administration for congressional action,”
he says.
Some business insiders and
legal analysts predict that congress will work to aggressively reform corporate
taxation soon, but for now, it seems that many companies are reaping the
benefits of this massive business regulations loophole.
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