Magical Thinking

Written by SK Ashby

(Cartoonist - Stuart Carlson)

In other news, U.S. retailers posted their largest drop in sales ever recorded (16.4 percent) in April, worse than economists predicted (12.3 percent).

Meanwhile, Trump's "biggest and greatest deal" with China is absolutely not going to fall apart because of the new sanctions on Huawei, Larry Kudlow says. We hardly knew ya.

Finally, tax lawyers who spoke to Bloomberg say formerly American-based companies who moved their headquarters out of the country in tax inversions can still qualify for the Federal Reserve's coronavirus bailouts.

American companies that moved their official headquarters offshore to avoid U.S. taxes could qualify for coronavirus aid from the Federal Reserve, tax lawyers say, raising new questions about which firms should get access to public money.

Under guidelines published by the Fed, companies that engaged in so-called corporate inversion transactions while maintaining meaningful U.S. operations appear to be eligible for two new programs designed to provide credit to large employers by purchasing new or outstanding corporate bonds. [...]

Allowing “inverted” companies to use the Fed’s facilities makes sense because the firms are still largely American and retain U.S.-based workforces, despite their new legal addresses in places like Bermuda or Ireland, said Reuven Avi-Yonah, a corporate and international taxation profession at the University of Michigan Law School.

“I don’t see any good economic reason to exclude inverted companies,” said Avi-Yonah, who has criticized inversion transactions as a tax-avoidance technique for decades. “They are just as American as other companies -- that is, in fact, the problem with inversions in the first place.”

So far, so good after my first week of hormone replacement therapy.

Have a good weekend.