The report was based on a letter drafted by CalPERS Chief Investment Officer Mark Anson, that calls on Congress to close federal tax loopholes that provide an opportunity for US corporations to reincorporate in offshore tax havens.
“As part of this effort to halt further expatriation, we urge Congress to take immediate action to eliminate the tax incentives that entice companies to relocate to tax haven foreign nations,” Anson said in the letter.
Those tax incentives allow companies to reincorporate in an offshore address in a “corporate inversion.” Companies can then cut their tax burden by avoiding US taxes on overseas income; even though in most cases, the companies only set up a shell account, keeping their main operations in the US.
Anson adds in the letter than these tax benefits are obstructing shareholder ability ” to pursue their rightful legal remedies in the event of mismanagement or illegal actions.”
This is the latest in recent steps taken by CalPERS to halt corporate inversions. In November , CalPERS asked the boards of Tyco International, Ingersoll-Rand and McDermont International to allow shareholders to vote next spring on whether the firms should repatriate to the US.
Last summer California Treasurer Phil Angelides, who sits on the boards of CalPERS and the California State Teachers Retirement Systems (CalSTRS) – two of the largest pension funds in the nation, has previously proposed a blacklist of 23 companies that have undertaken such moves to avoid taxes – a list that could add up to $752 million of holdings for the California funds (see Cal. Treasurer Targets Firms Heading Offshore ).