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Icahn Enterprises: How Much Would Carl Icahn Benefit From Tax Reform?

Billionaire investor Carl Icahn has pledged $150 million toward seeding a Super PAC to lobby Congress to help pass his version of corporate tax reform, which likely means the passage of corporate tax breaks like a repatriation holiday. While $150 million seems like a huge amount of money to spend, it’s possible that Icahn may simply be making yet another wise investment.

According to Icahn Enterprises’ financial filings, the company discloses holding a minimum of $962 million in unrepatriated profits offshore and has at least 28 offshore tax haven subsidiaries. If Icahn’s lobbying efforts for a repatriation holiday alone are successful, his company could potentially end up saving more than the $150 million he invested. For example, if Icahn Enterprises is paying the average foreign rate of 6.4 percent on its offshore earnings and the repatriation holiday rate was 5.25 percent (the rate in 2004), Icahn Enterprises could save a cool $234 million in taxes. It’s likely he’d personally profit even more from the repatriation holiday providing a break to companies that he’s invested in, to say nothing of tax breaks Congress might push through.

Airbnb: The Not Sharing Economy

According to a Bloomberg report, Airbnb has set up an “extensive web of subsidiaries” that will allow it to dodge taxes on much of its income. Specifically, Airbnb may be following in Apple’s footsteps by funneling its profits to an Irish subsidiary, which then allows it to escape taxation by shifting its intellectual property to a zero tax country (in this case the Isle of Jersey). Not only do such maneuvers allow Airbnb to get away without paying their fair share in taxes, they also give the company an unfair competitive advantage over more traditional lodging companies who are less able to shift their profits offshore. As more and more of the economy becomes dependent on intellectual property, it will become even more vital that lawmakers act to shut down this kind of offshore tax avoidance.

Coca Cola Enterprises: Earnings Stripping Provisions Already Having an Impact

A recent news report found that new Treasury rules targeting inversions may reduce the tax savings of Coca-Cola Enterprises’ proposed merger by as much $375 million. This report is one of the first instances of companies disclosing that Treasury’s crackdown on earnings stripping, a practice in which intercompany loans are used to shift profits to low- or no-tax jurisdictions, will have a significant impact on the projected tax benefits from a merger. While Coca-Cola Enterprises still plans to move forward with its merger, this report shows that the Treasury rules will help take away tax avoidance as a driver of such mergers.