Kerry and Me
Noone understood why Kerry would propose a tax plan that would crush the profits of multinational corporations, like his sugar mamma's company Heinz. He just didn't seem like someone who would be willing to give up his own multi-million dollar fortune for the sake of keeping a few America factory jobs from going overseas. But lo and behold! Economist Kevin Hasset has discovered that our confusion was unneccesary! The Kerry tax plan is neither good for job creation (as most of us were able to figure out immediately), NOR bad for Kerry's pocketbook. The slimeball has included a loophole in which US multinationals which operate smaller facilities in the same countries, in which they make their sales wouldn't have to pay American taxes at all!! I'll give you three guesses which company is already positioned to reap almost a billion dollars worth of tax breaks thanks to the Kerry plan... no, not Haliburton. No, not Enron... If you guessed Heinz, you've won a free Botox session.
Quote:
Because of local food regulations, and concerns about spoilage, it is often the case that food companies locate a separate plant in each country that they serve. Chief among these is Heinz, which owns 57 plants outside of North America that, as the company states, "provide products to consumers in those markets."
Heinz is so successful at capturing local markets that, according to form 10-K, almost 84 percent of its income from continuing operations came from foreign markets in 2003. Accordingly, the impact of the Kerry plan on that company's value would be tremendous. If we assume that deferring U.S. tax on their foreign income saves them the difference between the U.S. tax and the average foreign tax, then that adds up to annual savings of about $43 million. With a P/E ratio of 19.35, that means that absent the loophole, the firm's market value would drop by about $832 million upon passage of the Kerry tax plan. Assuming that the Kerry-Heinz family's share of the company is four percent, which is the upper limit of what has been reported, then this loophole saves Mr. Kerry's family around $33 million. It is easy to see why they might support this loophole, but hard to see why anyone else would.
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So while the rest of the corporate world gets a good kick in the balls by Kerry's plan, Heinz ( and Kerry's bank account ) will see thier valuations skyrocket.
Did we expect any less from this opportunist?