In an email Monday to Bloomberg News, the Vermont senator said a potential merger between Johnson Controls and Tyco International “would be a disaster for American taxpayers.”
The Glendale-based commercial heating-and-cooling firm announced Monday that it would acquire Tyco International of Ireland. Johnson Controls executives would remain in Glendale, but the headquarters for the merged company would be moved to the city of Cork in the Republic of Ireland, where Tyco has been incorporated since 2014.
Ireland is a popular destination for U.S. companies seeking new tax domiciles, and the move is expected to save Johnson Controls $150 million in taxes annually. Such moves through acquisition are known as “inversion.”
“Profitable companies that have received corporate welfare from American taxpayers should not be allowed to renounce their U.S. citizenship to avoid paying U.S. taxes,” Sanders said.
Wisconsin Senator Ron Johnson said he was “disappointed, but not surprised,” by the decision. “Ireland’s top corporate tax rate is 12.5%. The top U.S. corporate rate is 35%. That’s the developed world’s highest rate, and Washington levies it even on income that companies earn in other countries. By making Ireland its tax home, Johnson Controls will still pay U.S. and Wisconsin taxes on profits it earns in America, but its overseas earnings will be subject to the far more competitive Irish tax law.”