Arris Group is a supplier of cable TV and telecommunications equipment founded in 1995 headquartered in Suwanee, Georgia. It reported 2014 revenue of over $5 billion. Some of its customers include major telecom companies such as Comcast, Charter, and AT&T. It also provides communications technology to NASCAR as well as sponsor backflipping race car driver Carl Edwards.
Arris recently announced its intent to buy Pace PLC, a British outfit that serves many of the same markets. In a recent interview concerning this merger, Arris Group CEO Bob Stanzione said the merged company would be incorporated in the UK, not the US. The reason? Taxes. Stanzione said that the firm wanted to take advantage of the lower tax rates in the UK. He expects the company’s tax rate to be somewhere about 26-28% across the pond versus Arris’ current range of 32-35% at US rates.
These types of deals have come to be called “inversions”. Maybe Edwards inspired Arris to do its own form of financial acrobatics. Regardless of the inspiration, the US government hasn’t taken kindly to such actions. The Treasury Department rattled its saber in 2014 in reaction to Burger King’s announced intention to move its official headquarters to Canada. Federal attitude has been to try to intimidate companies from executing these deals and to penalize those that do. President Obama added the following comment: “They shouldn’t turn their back on the country that made their success possible.”
But this is a problem of our own making. Instead of blaming corporations for doing what our government incents them to do, we should deal with the cause of the problem. Pass the FairTax® and this would be a non-issue.