A study in scarlet

Tech Central Station has not only published Kevin Hassett’s terrific column on the Kerry corporate tax reform plan geared to addressing the alleged problem of “outsourcing” of jobs overseas — “Kerry and me” — they have illustrated it with the biting graphic below.
heinzkerry.jpg
Let’s jump to the conclusion that gives rise to the graphic:

[T]he impact of the Kerry plan on th[e Heinz] 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.

Please read the whole thing.

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