Aon sees payoff from tax inversion
By Becky Yerak, Chicago Tribune | |
McClatchy-Tribune Information Services |
It also reduced a hefty corporate tax bill, newly filed documents suggest.
The commercial insurance brokerage now based in
The new home might have helped it save as much as
"They've attributed some of the lower tax rate to the geographic sources of earnings -- earnings more in lower-tax jurisdictions," and past quarters have been affected by tax items that didn't materialize in the latest second quarter, said
The potential savings highlight the allure for
Deals in which U.S. companies avoid federal taxes by moving their tax domiciles overseas are known as "inversions." In all, nine such transactions have been agreed to this year, and more are being considered. The transactions are setting a record pace since the first inversion 32 years ago.
Aon announced its headquarters move overseas in
On Thursday, he asked
The topic also came up last week when Federal Reserve Chair
"If companies continue to change their domicile, we're going to lose receipts, we're going to lose jobs," Rep.
Any legislation introduced during the next two years is unlikely to go anywhere, partly because of gridlock in
Still, there are broader social and philosophical issues to consider, he said.
"Are corporations responsible only to their shareholders, or do they have a broader duty to such stakeholders as employees, customers, suppliers and society?" said Longworth, also a former foreign correspondent for the Tribune.
Aon, which still has thousands of employees in the
"The earnings beat was driven by a materially lower-than-expected effective tax rate due to the favorable impact from changes in the geographic distribution of income," among other things,
Tax savings are giving Aon more resources to make such shareholder-friendly moves as share repurchases. The company bought back
Stock buybacks are generally cheered by investors because they're supposed to reduce the number of shares in the open market. So when the company makes money, profits per share are higher because those earnings are sliced into fewer pieces. That should make each share worth more because it's entitled to a bigger piece of company profits.
The number of Aon shares in the market fell to 302 million in the second quarter, compared with 317 million in the same period last year. The stock buyback was more than Shields, of Keefe Bruyette, expected.
Aon's revenue, however, came in lower than expected, causing its shares to fall 5.1 percent Friday to close at
In the first quarter of 2014, Aon's corporate tax rate was 18.9 percent.
"The 17.5 percent effective tax rate is probably on the lower side for one single quarter," Morningstar analyst
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