This Bud's for Belgium

Much of Cindy McCain’s wealth traces to the Anheuser-Busch beer wholesaling company that her father started in 1955. She worked there for 20 years and took over in December 2000. At one point, her personalized license plates read “MS BUD.”
Sure, Cindy McCain is Ms. Bud. But there’s no truth whatsover that she’s a member of the Budweiser Thirst Patrol. None whatsover.

Politicians and Wall Streeters are starting to ask why the Belgian beer company InBev purchased Anheuser-Busch and not the other way around. Anheuser-Busch is an iconic American firm and some find it almost unpatriotic that Anheuser CEO August Busch IV allowed the "King of Beers" to relocate across the Atlantic -- though shareholders were the big winners here with a $50 billion-plus takeaway.

But here's the real question: Was the takeover basically financed by the savings Anheuser expected from escaping America's increasingly uncompetitive corporate tax system? According to the Tax Foundation, Belgium's corporate tax rate is 33%, but the effective tax rate can be half the nominal rate thanks to adjustments for something the OECD calls a "notional allowance for corporate equity." Bottom line: InBev was paying around 20% of its profits in corporate taxes, compared to Anheuser-Busch's rate of 38.4%.

Things have gotten pretty bad when U.S. companies relocate to Europe to cut their tax payments. But a research analysis by Morgan Stanley finds the combined company's corporate tax bill will be lower than in the U.S. and that the tax differential indeed figured into the economics of the sale.
So while John McCain may have benefited from his wife's ownership of Anheuser stock (estimated at between 40,000 and 80,000 shares), the country will continue to see its competitive edge wither away without a corporate tax rate cut. Mr. McCain to his credit wants to cut the corporate tax rate to 25%, close to the global average. Senator Obama is more interested in raising tax rates than cutting them.

Wall Street dealmakers tell us to expect more sales of U.S. companies to European rivals thanks to the combination of America's higher corporate taxes and the weak dollar. They're right. New data from the OECD for 2008 indicate that the international average for corporate tax rates fell by another percentage point last year, meaning the U.S. is pricing itself out of the market as a corporate headquarters. "America's 35% corporate tax rate is not just bad economics, it's downright unpatriotic," says tax expert Kevin Hassett of the American Enterprise Institute.