England's Tax Hikes Sending European Companies Packing

This is a rush transcript from "Your World With Neil Cavuto," July 13, 2009. This copy may not be in its final form and may be updated.

STUART VARNEY, GUEST HOST: A tax revolt in Europe — McDonald's moving its European headquarters from London to Switzerland. It is the latest in a long list of companies bolting from England because of rising taxes.

It is happening there. My next guest says it could be happening here.

John Tabacco is with LocateStock.com.

All right, John, let's suppose we — well, taxes are rising here.


VARNEY: Let's suppose that an American company bolts, goes overseas. I submit that, if they did that, they would get a nasty black eye in terms of their public image, and there would be a backlash against them.

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TABACCO: First of all, Stuart, I have a feeling that this "tax-and- spendemic," which we're seeing over in Europe, is going to make its way over here. And it is.

We have a filibuster-proof majority now who seems to be supersizing spending plans like Ronald McDonald. And it is just unsustainable that we could keep spending like this without raising taxes. And companies with foresight are going to realize that this is just around the corner, and they are going to start moving to other countries right away.

VARNEY: So, you're — you're looking to the future. And you're saying that tax hikes on individuals — let's talk individuals for a second, not corporations.


VARNEY: You're saying that this inevitable, right?

TABACCO: Without question.

VARNEY: And they see it coming, so they start making plans now?

TABACCO: Without question. Obama said that he was not going to raise taxes on people who have made less than $250,000. He's hedging on that already. There are some state plans that would make — state taxes that have gone up that would raise taxes on people with their federal remaining the same. That already defeats that.

So, it's only going to trickle down to the corporations, because, if...

VARNEY: Well...

TABACCO: ... individuals get taxed more, they are not going to spend money with the businesses.


TABACCO: So, why be headquartered here?

VARNEY: OK. But America, I can contest — attest to this, that America is a very attractive place. It is a great place to live. And if you want to live here, with all the freedom and prosperity and the size and scope and space that we have got in America, then pay the price.

And, if the price is higher taxes, then pay it, and keep quiet, and do your bit. What is wrong with that argument?

TABACCO: I'm with you on that.

I think America is the greatest country on the planet. There's no doubt about it. There's no bigger patriot than me. But, right now, we're in a time when the economic crisis is so bad that there is going to be a flight to safety. And if corporations think there is a safer haven out there...

VARNEY: Where is it?

TABACCO: ... where they could save a couple of pennies...

VARNEY: Where is it?

TABACCO: I don't know where it is...

VARNEY: Switzerland?

TABACCO: ... but I know a lot of companies seem to be moving toward Switzerland at this point. So, maybe there are some attractive — attractive reasons why companies would see that has a safe haven, too.

VARNEY: Remember, though, John, the top rate of tax in England has been moved to 50 percent. In America, the proposal is that it moves up to 39.456 percent. There's a big difference between the two.

TABACCO: There is.

VARNEY: We are not — we're nowhere near there yet.

TABACCO: We're not near there yet.

But where out taxes are and where unemployment is going, where productivity and — and output is in our manufacturing plants, it just seems that, with higher taxes, less employment, less productivity, it is not much incentive for corporations to remain here. And, if there are a couple of pennies out there to be saved by being in Geneva, I — I say to you that...


TABACCO: ... they are going to start moving sooner, rather than later.

VARNEY: Yes, it's a fair point, because, if you look at the bottom line. You don't look at your emotions about the sunshine...


VARNEY: ... and the big wide-open spaces of California.

However, I feel more secure in listening to you if you could tell me where they're going to go, because taxes are rising all over the world. I mean, you are not going to go and live in Beijing.

TABACCO: Why are other companies moving to Geneva, I ask you Stuart?

I'm not an international tax code specialist, but what I could say to you is, there is obviously something out there that's making companies think that they can get a better deal by moving their company to Geneva.

VARNEY: Yes. Well, you know, Switzerland might be losing its bank secrecy laws anytime soon.


VARNEY: You never know about that.

John Tabacco, always a pleasure. Thank you very much, John.

TABACCO: Thank you, Stuart.

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