Banks Are Reaping the Benefits From Inversions

Banks Are Reaping the Benefits From Inversions

Up until now, most of the attention regarding tax inversions has been put on the companies that have been choosing to make these deals. After all, it’s the companies that are saving a bunch of money on their taxes and supposedly cheating the U.S. Treasury out of more money. However, it’s not just the companies themselves that are benefitting from these deals. The banks that broker them are reaping the benefits as well.

Banks Are Wheeling and Dealing

Despite claims by many politicians in the nation’s capitol that tax inversions are un-American and that they are robbing the country of important tax dollars, there are many banks that are willing to step up and help make these deals happen. Why, you ask, because the banks can make a lot of money doing these deals. Plus, if one bank says no, it’s well aware that another bank will say yes and therefore reap the benefits.

Good Business Sense

Even though many lawmakers would have you believe that inversions are wrong, the fact is they are not illegal and they are not immoral or un-American. They are however, in many cases, just simply good business. So which banks are doing these deals and which banks are making the most money from them?

Lots to Be Made

There have been more than 30 of these deals since 2011. Leading the way is Goldman Sachs, which has reportedly completed 10 tax inversions for total revenue of just over $202 million. Coming in a close second on the list is JP Morgan Chase, which has done seven of such deals and earned revenue of nearly $185 million. Morgan Stanley, Citigroup and Greenhill & Company have also assisted with tax inversions making between roughly $97 million and $55 million respectively.

The Debate Rages on

The debate over tax inversions will no doubt continue as long as lawmakers are unable to make significant changes to the country’s corporate tax code. That’s because without meaningful changes companies will continue to consider these deals and it appears that they will continue to make them. Although lawmakers want to put a stop to inversions, it seems that the real solution might lay in tax reform. The bottom line, unless Congress is willing to make things easier for companies to do business and help them keep more of their hard-earned money, tax inversions are likely to continue.

Time Will Tell

Only time will tell the true affect of these kinds of deals on the country and its overall financial well-being. However, one thing is for certain, the financial institutes that help companies do these deals will continue to reap the rewards.

GROCO Believes in Sound Tax Planning

At GROCO, we believe that saving as much money on your taxes as legally possible is both fair and smart. We have a wealth of knowledge and experience in helping our clients plan for and save on their taxes. If you would like to learn more about what we do and how we can help you, then contact us online or call us at 1-877-CPA-2006.

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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

 

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