There’s a tax loophole currently in operation that gives a big financial incentive to any US corporation to relocate its corporate HQ to a lower tax regime. This is US-sanctioned tax avoidance. The latest corporation lining up to take advantage of this is Fiat-Chrysler which is proposing to shift to London. For the record, the British rate of corporation tax is falling to 20%. If you look at Italy, the tax rate is 31.4%. This move to Britain is a big saving.
That said, it’s a big loss to the US both in terms of lost tax and because it will mean a serious loss of management jobs. It will be very interesting to see how American consumers react. A lot of US taxpayers money went into bailing out Chrysler. For it now to disappear overseas is somewhat insulting. Of course nothing should change as to the quality of design or the safety of the vehicles. Let’s be clear, there’s nothing illegal about what’s proposed. It’s a perfectly rational decision to reduce the amount of tax paid. It’s just a shame it should happen to a US company called Chrysler.