Money Minute: Medtronic Merger Deal a Tax Dodge?

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Medtronic is the latest to join a list of health care companies seeking lower corporate tax rates abroad through acquisitions.

Medical device-maker Medtronic (MDT) is reportedly in advance talks to acquire its rival Covidien (COV) for almost $43 billion. The deal, structured as a "tax inversion" would allow Medtronic to shift its headquarters to Ireland, where Covidien is located. Ireland's main corporate tax rate is 12.5 percent whereas here in the U.S. it's 35 percent -- among the highest in the world. Pfizer (PFE) tried a similar move through its failed bid for AstraZeneca (AZN), but Actavis (ACT) and Perrigo (PRGO) managed to get their tax inversion deals approved. Tax inversions are legal now but some lawmakers want to see that change.

According to a new study the impact of consolidation in the airline business isn't all bad for consumers. The government report finds competition actually increased slightly on some of the more popular routes like New York to Los Angeles. But smaller airports and less popular routes have seen fewer airlines servicing them since the merger mania in the industry. From 2007 to 2012 Delta Air Lines (DAL) bought Northwest, United (UAL) merged with Continental and Southwest (LUV) bought AirTran.

Here on Wall Street, the three major indexes fell last week. The The Dow Jones industrial average (^DJI) lost 0.9 percent, the Nasdaq composite (^IXIC) fell a quarter of a percent and the Standard & Poor's 500 index (^GPSC) dropped 0.7 percent. It was Wall Street's first weekly drop in a month.

The World Cup has been on for less than a week but it's already getting more buzz on social media sites and blogs than the Sochi Olympics and this year's Super Bowl. According to the Adobe Digital Index, the World Cup was mentioned 19 million times among the sites it tracks in the year leading up to the beginning of the games in Brazil. The busiest commentators are in Japan where fans have posted nearly two out of every five mentions.

Finally, as a teenager, zipping around in your own set of wheels used to boost your cool quotient dramatically. Well that's less so among today's teens according to Toyota's (TM) CEO of Motor Sales and Marketing. In a USA Today report he says the lack of car enthusiasm among teens is a global phenomenon and something to worry about. To get more teens revved up about cars the company has a contest asking them to describe their dream car of the future. Some of the ideas are pretty wacky.

-Produced by Karina Huber.


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9 Comments

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pipetsa

WE PAY THE TAXES WHILE 44 U S COMPANIES HAVE HEADQUARTERS OVERSEAS. HOW AMERICAN ARE THESE BUSINESSES?

June 17 2014 at 8:45 AM Report abuse rate up rate down Reply
teeessiii

Medtronic spends way too much on bribes to politicians to be satisfied with anything other than "extra special treatment" when it comes to taxation. Does Medtronic pay any taxes at all.......or are they fully subsidized by the taxpayers?
'

June 16 2014 at 12:44 PM Report abuse +1 rate up rate down Reply
rudnab

SORRY ACCORDING TO MSN MONEY NOT DAILY FINANCE FOR STOCK MDT 10 YEAR SUMMARY SAID TAXES ARE 18% NOT 35 %, SOMEBODY IS WRONG ?

June 16 2014 at 12:21 PM Report abuse rate up rate down Reply
rudnab

ACCORDING TO DAILY FINACE WEB PAGE FOR { MDT } 10YEAR SUMMARY TAXES ARE ONLY 18% . THE ARTICLE SAID TAXES ARE 35 %, SOMEBODY IS WRONG ?

June 16 2014 at 12:17 PM Report abuse -2 rate up rate down Reply
djsj21643

"we" are so stupid that it really hurts to just think of the idiocy.....of COURSE this is a tax dodge....think of yourself in the position of a major corporation, employing people, paying them a wage/salary, providing insurance, etc.etc. .... and then the government comes along and sticks it's greasy, grubby fist in your pocket and takes whatever profit you made and were going to use to hire more people and pay them a wage/salary, would you just sit there? I know I wouldn't....For those of you who do not know, many old US companies have already bailed out and gone to Ireland....how long will it take our illustrious Congress to wake up and begin working with companies rather than against them.....it's a rhetorical question.....

June 16 2014 at 12:08 PM Report abuse +2 rate up rate down Reply
Larry

What a BS aside on airline mergers. With little content,. it doesn't get into the diluting of frequent flyer programs, the divisiveness of workforce merging, and the sometimes predatory nature of management toward the front line workforce (the ones the customers actually ever see), ala United/Continental.

Add to that the admission that all but mega markets get cut back in service and the article clearly only cares about the people targeted for benefits, not the majority that aren't.

June 16 2014 at 11:00 AM Report abuse -3 rate up rate down Reply
1 reply to Larry's comment
Ken

That's capitalism at work.....merge, get as much as you can from the customer, and the shareholder(CEO"S) WILL BENEFIT

June 16 2014 at 3:39 PM Report abuse rate up rate down Reply
digitalmag

So Medtronic can now be classified as a Corporate WElfare Bum.

Corporate taxes should be based on a percentage of gross sales, without the provision for write-offs. The percentage could be based on different levels of sales with companies under 1 mil per year paying nothing and companies with sales over 40 mil paying up to 5%. This could be applied to companies that import products into the US and it would remove the benefit of off shoring executive offices.

US citizens and permanent residents pay US taxes on World wide income no matter where they live. Corporations selling products in the US should do the same.

June 16 2014 at 9:03 AM Report abuse -4 rate up rate down Reply