Hastings International and Comparative Law Review


Eric Tak Han


Reincorporating companies have been called "Benedict Arnold corporations" by many U.S. politicians. However, reincorporation (corporate inversion) reduces a corporation's costs, and therefore, maximizes its profits. This note discusses the tax benefits corporations receive if they reincorporate outside of the United States, and suggests that this reincorporation does not cause a loss of jobs; rather, the decision not to reincorporate may lead to a loss of jobs in the United States, because these domestic corporations cannot compete on the global market. This note looks at the U.S. tax system by comparing two corporations, Tyco International Inc., a company that did reincorporate, with Stanley Work, a company that decided against reincorporation. It also examines South Africa and the Netherlands as possible models for U.S. tax reform.