The Belgian buyout

The InBev buyout of Budweiser is going through. Paul Krugman catches my favorite observation in a story from the WSJ:

“I’ll tell you one thing,” said the 21-year-old concrete worker during his lunch break at The Brick of St. Louis bar, in the shadow of this city’s storied Anheuser-Busch Cos. brewery, “if Budweiser is made by a different country, I don’t drink Budweiser anymore. I’ll go back to Wild Turkey.” (Wild Turkey, a Kentucky bourbon, is owned by French drinks giant Pernod Ricard SA.)

Dan Mitchell looks sees in the buyout a lesson for the US tax code:

Rather than engage in demagoguery against foreign investment, maybe Senator Obama and his colleagues should fix the tax code so that U.S. companies are not disadvantaged in global markets. America’s high corporate tax rate, combined with a pernicious policy of taxing worldwide income of American-based firms, makes it very difficult for those companies to compete.

Belgium, by contrast, has a lower corporate tax rate. More important, it has a territorial tax system — the common-sense notion of taxing only income earned inside national borders. As such, it makes sense — from the perspective of all shareholders — for Anheuser-Busch to be taken over by InBev rather than the other way around. Indeed, that is why American companies almost always become the subsidiary rather than the parent when there is a cross-border merger.

Fans of real Belgian beer should plan to knock a few back this Monday, July 21, Belgium’s Independence Day. Brasserie Beck in DC is celebrating with half-price drafts all day on 18 different beers. The list is online at the restaurant’s stupid, unlinkable Flash site.


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