Migrating Intangible Assets for Pennies on the Dollar – Lawyers Say the Darndest Things

I likely would not get much of an argument from most sensible people if I suggested that U.S. based multinationals have shifted a lot of profits to offshore tax havens by selling their intangible assets for pennies on the dollar. Of course, some lawyers make their livings defending these transfer pricing schemes and some economist (such as Bill Morgan) might dare to object. It seems a couple of these lawyers believe it is their professional duty to ridicule any economist who might so object:

Those of us of a certain vintage may recall the old Art Linklater radio/television program, “House Party,” which had a recurring, humorous feature known as Kids Say the Darndest Things in which Art posed various questions to young children. (The series, which ran from 1945 to 1969, was also resurrected and reprised by Bill Cosby in the late 1990s.) The answers were hilarious as the kids often didn’t understand the question asked, misinterpreted the question or just flat out engaged their wonderful imaginations. The incongruity between the questions and answers gave rise to many smiles and chuckles. The authors recently were reminded of this show while reading the comments made by Bill Morgan, the Senior Economic Adviser to the APMA Program, at a Bloomberg BNA function in July 2013. In particular, we read with interest Morgan’s lament over the Tax Court’s opinion in VERITAS Software Corp. v. Commissioner.

Feel free to read their little opinion letter and judge for yourself the merits of the particular case. But I guess economists who actually try to tell the truth are subject to scorn from the legal profession when that truth challenges their client’s tax avoidance. But as Barry Ritholtz notes there appears to be no penalty for economists championing the rich via dubious if not deceptive claims.