MN governor cheers relocation of major corporation HQ to … Ireland

posted at 2:41 pm on June 18, 2014 by Ed Morrissey

When Rick Perry stumps for businesses to relocate, at least he’s cheering for his home state of Texas as the final destination. In Minnesota, we have the unusual experience of having a governor laud a corporation for moving its headquarters out of the state — and out of the country. Medtronic, a leading manufacturer of medical devices, acquired an Irish firm in the same sector, but will move its corporate headquarters to Ireland rather than transfer Covidien’s executive operations to Minnesota (via Gary Gross):

“As I look at the project as governor of Minnesota, this is a good deal for the people of our state,” the governor said on Monday.

Dayton said he was personally assured by Medtronic’s CEO Omar Ishrak that, while the company would move its headquarters to Ireland, it would keep its operational headquarters in Minnesota. The result would mean that not only would the company keep its existing 8,000 employees in the state, it would also add an additional 1,000 Minnesota workers in the coming years.

Opponents of the income tax hikes the DFL governor pushed have laid blame on Dayton for the company’s decision to move its headquarters to Ireland. Dayton said that blame is ill-founded.

“Minnesota taxes were not an issue in their decision, Minnesota taxes (on Medtronic) will remain essentially the same,” he said.

Two different Republican contenders for governor, Marty Seifert and Scott Honour, both blasted Dayton’s support for the move. Honour called it a “slap in the face,” and evidence that “tax and regulatory policies are chasing away Minnesota’s best companies.” Seifert blamed both ObamaCare — which has a tax on medical devices — and Dayton’s economic policies for the decision, calling it “a sad day” for Minnesota’s economy.

Honour’s probably the closest to the truth. If Medtronic is indeed going to add 1,000 jobs, it’s not because they’re transferring the corporate flag to Ireland, but either regardless or in spite of the move. ObamaCare might have an impact on hiring at Medtronic that’s outsized from other sectors, but moving the corporate HQ to Ireland won’t change that. The medical device tax applies to their products no matter where they’re headquartered.

What prompted Medtronic to move? Bloomberg’s Leonid Bershidsky lays the blame on federal tax and regulatory policies, and says the move does do damage to the Minnesota and US economy. If the US would fix its corporate tax policies, Bershidsky argues, we’d see a lot less of this rational response to the perverse incentives set up by the current system. Instead, the US seems ready to make the situation worse:

Medtronic’s planned $42.9 billion takeover of Dublin-based Covidien Plc wouldn’t crown a chain of such deals if they did not, as a rule, work. The data suggest U.S. companies that do tax inversions provide abnormal returns to shareholders — about 225 percent above the average, Elizabet Chorvat of the University of Chicago found in a recent study of such deals from 1993 to 2013. A Bloomberg News analysis of 14 U.S. corporate expatriations since 2010 also showed that the companies involved mostly outperformed the market benchmark.

The knee-jerk response of U.S. politicians has been to stop companies from seeking to improve their returns to shareholders. President Barack Obama proposed in his 2014 budget that U.S. companies should only be allowed to redomicile abroad if a merger transaction gave more than 50 percent of their equity to foreign companies, up from the current 20 percent. The brothers Sander and Carl Levin — a U.S. congressman and senator, respectively — are pushing through a similar bill. This would essentially force U.S. companies to acquire foreign firms bigger then themselves if they want to invert. The deals would become more difficult to structure, perhaps requiring the breakup of some U.S. corporations, but that would not stop companies from doing them so long as there are clear gains to be made.

Apart from this counterproductive “stop thief” approach, there is the utopian idea of getting all developed countries to tax multinational companies on the basis of where they actually make money. Taxes would then be calculated of the basis of sales, labor costs and investments by country. The logic appeals to Europeans, especially the French, when it comes to U.S. tech companies, but there’s no law saying all countries have to follow the same taxation principles. …

Instead of devising ways to punish companies for trying to make more money — closing the expatriation window or taxing foreign profits at U.S. rates — the mighty U.S. should emulate little Ireland. Its case is one of the clearest examples of how a low tax burden results in improved collection and a friendly business climate. With a 12.5 percent corporate rate, there would be no incentive for multinationals to keep profits parked overseas and more mergers would take place in the U.S. There would be fewer tax-motivated “deals made in hell,” too.

Basically, the problems that prompted Medtronic to relocate to Ireland are larger than Minnesota’s political and economic environment, although certainly one could argue that the local issues may or may not have exacerbated them. It’s just plain nonsense to stand in the capital and cheer the decision to leave whatever the reasons for the move. Minnesotans will have to ask themselves this fall if they’d rather have Dayton cheering failure or someone else at least cognizant of a setback when it occurs, no matter the reason.


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Take it away, Bishop-

M240H on June 18, 2014 at 2:43 PM

Minnesota — a self-mocking state.

Tard on June 18, 2014 at 2:47 PM

Dayton said he was personally assured by Medtronic’s CEO Omar Ishrak that, while the company would move its headquarters to Ireland, it would keep its operational headquarters in Minnesota. The result would mean that not only would the company keep its existing 8,000 employees in the state, it would also add an additional 1,000 Minnesota workers in the coming years.

He was personally assured? Well, that settles it then. Hey, Guv. Don’t think for one second that Medtronic won’t pick up and leave completely if operating in Minnesota becomes too cost-prohibitive.

Doughboy on June 18, 2014 at 2:47 PM

Yeah, well this is Mark Dayton we’re talking about.

Someone will have to created a children’s illustrated comic book for this issue so he can actually understand it.

climbnjump on June 18, 2014 at 2:48 PM

Now we just need all corporations to go away and take their jobs and taxes to other countries, and surely we’ll FINALLY have Utopia!

FORWARD!

Good Lt on June 18, 2014 at 2:49 PM

White flight!

/fascistordie

gwelf on June 18, 2014 at 2:50 PM

Hey Minnesota, we got rid of our loony governor, Two-Penny Jenny Granmole and is still reviled in this state. Get rid of this bum and you can recover as we have begun to.

8 weight on June 18, 2014 at 2:52 PM

Daytonomics taking a page from the Obamanomics playbook?

vnvet on June 18, 2014 at 2:55 PM

Before the end of this year – I would expect 5-10 more US F-100 companies to move HQ and ops out of the USA

jake-the-goose on June 18, 2014 at 2:56 PM

I use to live in Minnesota. Moved to North Dakota, just across the Red River am now about 1 mile from where I previously lived. Interesting thing happened, actually the reason why I moved, my take home pay went up over $100 per month. Much lower pay roll taxes. Its like free money. Of course, North Dakota is booming while Minnesota though doing OK is not charging ahead like North Dakota. Hummmmmmm, wonder what the difference could be, couldn’t be taxes could it, both personal and business.

Doesn’t take too many smarts to figure that one out.

Rockman44 on June 18, 2014 at 3:02 PM

“I was personally assured by Herr Hitler…” – Neville Chamberlain

Marcola on June 18, 2014 at 3:02 PM

Of course Democrats cheer the loss of employers. They don’t want people giving up EBT and welfare checks for paychecks. An independent working class is a THREAT to the Obama Regime.

ConstantineXI on June 18, 2014 at 3:07 PM

Now we just need all corporations to go away and take their jobs and taxes to other countries, and surely we’ll FINALLY have Utopia!

FORWARD!

Good Lt on June 18, 2014 at 2:49 PM

Yeah! Why wait for the goose to lay the golden eggs when you can cut her open and get them all at once?

Occams Stubble on June 18, 2014 at 3:07 PM

I use to live in Minnesota. Moved to North Dakota, just across the Red River am now about 1 mile from where I previously lived. Interesting thing happened, actually the reason why I moved, my take home pay went up over $100 per month. Much lower pay roll taxes. Its like free money. Of course, North Dakota is booming while Minnesota though doing OK is not charging ahead like North Dakota. Hummmmmmm, wonder what the difference could be, couldn’t be taxes could it, both personal and business.

Doesn’t take too many smarts to figure that one out.

Rockman44 on June 18, 2014 at 3:02 PM

Racist.

How DARE you deprive people of color of that much in tax dollars a month. You aren’t supposed to leave the People’s Democratic Republic Paradise, you are supposed to pay your “fair share” and like it.

Just be glad it wasn’t California or New York, their state IRS would be hounding you annually because NO ONE ever leaves those states, you are STILL LIVING THERE and evading taxes.

ConstantineXI on June 18, 2014 at 3:11 PM

we were personally assured we could keep our insurance also….

dmacleo on June 18, 2014 at 3:12 PM

Medtronic is just the latest “canary in the coal mine”

Taxes: Walgreen, America’s venerable drug-store chain, is thinking the unthinkable: relocating to Europe. Not because it sees growth and opportunity there, but because of onerous taxes here in the U.S. It’s an ominous trend.

The Financial Times of London calls it “one of the largest tax inversions ever.” That is, a company seeking to avoid punitive taxes in one market by moving to another.

According to an analysis by UBS, Walgreen’s U.S. tax rate is 37.5% — compared with Alliance Boots’ rate in Europe of about 20%. That’s a huge gap, worth billions of dollars a year.

A total of 547 companies — including Apple, GE, Microsoft and Pfizer — have dramatically expanded their so-called foreign indefinitely reinvested earnings overseas, which let them avoid the punishing rates here at home.

Not only are taxes too high, but also new laws such as Dodd-Frank and ObamaCare, a vast expansion of regulation, debt and the size of government, the federal takeover of entire industries, the bullying of Wall Street and demonization of CEOs, and forced CO2 cuts that will hammer manufacturers have made this the least pro-free market U.S. government in generations.

jake-the-goose on June 18, 2014 at 3:13 PM

The medical device tax applies to their products no matter where they’re headquartered.

Does it?

Are we sure that foreign medical device manufacturer’s are subject to the medical device tax in Obamacare?

Midas on June 18, 2014 at 3:14 PM

So embarrassing

gophergirl on June 18, 2014 at 3:17 PM

Are we sure that foreign medical device manufacturer’s are subject to the medical device tax in Obamacare?
Midas on June 18, 2014 at 3:14 PM

Even if it does, the Administration can selectively not enforce the tax for certain foreign (and domestic) companies.

Because Obama.

Marcola on June 18, 2014 at 3:19 PM

Are we sure that foreign medical device manufacturer’s are subject to the medical device tax in Obamacare?

Sure, they will just apply the tax to the end user. From the IRS computer that didn’t crash:

A1. Section 4191 of the Internal Revenue Code imposes an excise tax on the sale of certain medical devices by the manufacturer or importer of the device.

Grampa’s new hip just got more expensive as the added cost will just be passed on to him. #waronseniors.

F X Muldoon on June 18, 2014 at 3:22 PM

Even if it does, the Administration can selectively not enforce the tax for certain foreign (and domestic) companies.

Because Obama.

Marcola on June 18, 2014 at 3:19 PM

Yeah, that “equal protection” clause was so pre-2009. In fact, as far as I can tell, the Obama Regime has committed every crime possible under the Constitution except violate the 3rd Amendment (forced quartering of troops in private homes).

But that’s probably only because it’s not occurred to Jugeared Chicagojesus to do it.

ConstantineXI on June 18, 2014 at 3:23 PM

They should have thrown in Ed Schultz.

can_con on June 18, 2014 at 3:25 PM

(Mark) Dayton: Trust Fund Baby. Ironic, ain’t it?

ExpressoBold on June 18, 2014 at 3:29 PM

There are those that say you can’t tax the life out of companies, I reject that claim.
King Barky the Incompetent

jukin3 on June 18, 2014 at 3:30 PM

Didn’t Hewlett Packard recently announce that it’s cutting 16,000 jobs with most of the job losses in this country and not overseas. That’s a good thing right guv? So what could possibly go wrong when the cuts do come with Medtronics…I mean with the new wonderful Obama economy and all that.

cthemfly on June 18, 2014 at 3:30 PM

So will Minnesota now pass a $25 per hour minimum wage to keep jobs in Minnesota??

The libs brains are really frozen in Minnesota……

I had to go to Minnesota for business in December…..never again….

it was the most miserable experience of my life, why in the hell do people stay there in the winter???

I was asked to go do a job in Minnesota a few years later, I told them I was busy and gave them the name of a competitor I do not like….heh, heh….

redguy on June 18, 2014 at 3:32 PM

Let’s raise taxes to make up for lost revenue!

Little Boomer on June 18, 2014 at 3:41 PM

What prompted Medtronic to move?

Muzzy likey Ireland more than MN ?
You know money movement and all in within EU….. and out

Medtronic’s CEO Omar Ishrak

burrata on June 18, 2014 at 3:44 PM

Dayton said that blame is ill-founded.

“Minnesota taxes were not an issue in their decision, Minnesota taxes (on Medtronic) will remain essentially the same,” he said.

That’s just my finger also.

arnold ziffel on June 18, 2014 at 3:47 PM

Oh Jeez! You got da pink slip fer sure but still hafta pay dem taxes!

Roy Rogers on June 18, 2014 at 3:50 PM

it was the most miserable experience of my life, why in the hell do people stay there in the winter???

redguy on June 18, 2014 at 3:32 PM

Dem snow plows block da driveway. Don’t ya know that then?

Roy Rogers on June 18, 2014 at 3:52 PM

So embarrassing

gophergirl on June 18, 2014 at 3:17 PM

Hey, at least he isn’t hiding under his desk this time..

BigWyo on June 18, 2014 at 3:53 PM

Medtronic is just the latest “canary in the coal mine”

jake-the-goose on June 18, 2014 at 3:13 PM

Ah hem… Don’t you mean, “canary in the windmill farm”?

Let’s remember to change with the times…

climbnjump on June 18, 2014 at 4:01 PM

I’m sure that Medtronic will continue its charity contributions to important MN cultural organizations instead of shifting them to Irish ones.
Yeah right, I lied, just like Dayton.

Another Drew on June 18, 2014 at 4:05 PM

Are we sure that foreign medical device manufacturer’s are subject to the medical device tax in Obamacare?
Sure, they will just apply the tax to the end user. From the IRS computer that didn’t crash:

A1. Section 4191 of the Internal Revenue Code imposes an excise tax on the sale of certain medical devices by the manufacturer or importer of the device.
Grampa’s new hip just got more expensive as the added cost will just be passed on to him. #waronseniors.

F X Muldoon on June 18, 2014 at 3:22 PM

See, I work for a medical device manufacturer, and I promise you, passing this through to the end-user has been… problematic.

And if a ‘foreign’ manufacturer is not subject to the manufacturer tax, there’s nothing for them to even try to pass along.

Midas on June 18, 2014 at 4:10 PM

Liberals have a unique ability to rationalize defeat into some form of pseudo-victory so I expect that Minnesota voters will find a way to reward this failure.

clippermiami on June 18, 2014 at 4:11 PM

What an amazingly stupid individual Gov Dayton is….

As they say…elections have consequences.

abnormal_1 on June 18, 2014 at 4:18 PM

Just wait until 3M moves.

RickB on June 18, 2014 at 4:22 PM

Minnesota voters are so stupid….many of them voted for obama twice…..

crosshugger on June 18, 2014 at 4:31 PM

What a great move. If only all governors could be like Dayton. . . Then we could just quit looking for work.

COgirl on June 18, 2014 at 4:38 PM

Meditronics is buying the Ireland based company by the name of Covidien to accomplish this move. Covidien shareholders are very happy. Their stock is up around 30%. The symbol for Covidien is COV. Go check it for yourself.

SC.Charlie on June 18, 2014 at 4:40 PM

Very sad that Mark Dayton is apparently drinking again /s

matthew8787 on June 18, 2014 at 4:45 PM

Yeah, well this is Mark Dayton we’re talking about.

Someone will have to created a children’s illustrated comic book for this issue so he can actually understand it.

climbnjump on June 18, 2014 at 2:48 PM

We have a governor just like that here in WA… ref $15 min wage…

Tard on June 18, 2014 at 4:51 PM

“Brave Sir Dayton, brave SIr Dayton! He bravely ran away.”
“He ran, and ran, and ran and ran and Dayton ran away…”

orangemtl on June 18, 2014 at 5:12 PM

Speaking of relocation:

ICE shipping planeloads of illegal immigrants to Massachusetts

“There are a number of concerns,” said Jessica Vaughn spokesperson for the Center for Immigration Studies, adding that the crisis at the border is distracting U.S. agencies from their regular mission to deport illegal immigrants convicted of crimes.

Recent reports found that in May, ICE released 36,000 immigrants with criminal convictions into communities for a number of reasons, Vaughn said.

“This influx of people is a direct result of recent policies,” she said. “According to border patrol’s own intelligence, what the immigrants are telling them, is that they’re coming now because there’s a new law that gives them permission to stay.”

When Fox 25 questioned Massachusetts Gov. Duval Patrick about the flights, he said he was just hearing about the situation.

“I don’t know anything about it,” Patrick said.

“How does the governor not know anything about this?” the news anchor asked.

V7_Sport on June 18, 2014 at 5:33 PM

And if a ‘foreign’ manufacturer is not subject to the manufacturer tax, there’s nothing for them to even try to pass along.

If the device is actually manufactured by a foreign manufacturer, the law then stipulates that the importer pays the tax.

Either way, there is no way either a manufacturer or importer is going to eat a 2.3% tax.

F X Muldoon on June 18, 2014 at 6:09 PM

Welcome to the ice age, when all businesses go extinct in the Union States of America.
“Do you realize what you’ve done!” Lloyd Christmas

kregg on June 18, 2014 at 6:28 PM

To a politician, everything is “good news” when they realize they can’t do anything about it.

Obviously, the company is now free to restructure its fortunes free of the interference of such thugs.

virgo on June 19, 2014 at 11:05 AM

Valerie jarretts policies sure suc

losarkos on July 3, 2014 at 5:55 PM