During an appearance in Milwaukee, U.S. Rep. Paul Ryan delved into the growing controversy surrounding inversions, the practice of U.S.-based companies buying foreign firms and then relocating their own headquarters to another country to enjoy lower taxes.
Bloomberg News reported that nine U.S. companies are planning tax inversions this year.
The most recent and highest profile case came in August 2014 when Burger King said it planned to buy Canada-based doughnut chain Tim Hortons and relocate its own headquarters from the United States to Canada.
In an appearance before the Rotary Club of Milwaukee and the Milwaukee Press Club, Ryan was asked if inversions should be banned. He said that the U.S. tax code needed reform and that American-based companies pay far more in taxes than their counterparts in other countries.
"The trend we have seen lately are foreign companies buying U.S. companies for many reasons, like tax reasons," said Ryan, R-Janesville. "Simply putting up a fortress around America with these anti-inversion rules, all that we'll end up doing is accelerate the takeover of U.S. corporations by foreign corporations."
Ryan then popped open a claim involving one of Brewtown’s icons.
"Miller is not a U.S. company any more. Neither is Anheuser-Busch," he said. "Think of what this does to our communities. The royalties, the headquarters and all that."
Yes, beer and politics get mixed up again.
A few weeks back, Democratic gubernatorial candidate Mary Burke told an ABC News interviewer that she favored New Glarus Brewing Co.’s Spotted Cow to Leinenkugel's Summer Shandy, because Spotted Cow was available only in Wisconsin. After asking around to see if that was widely known, we checked it out and rated it True.
When we asked our beer drinking cohorts about where Miller and Bud were based, we got some of the same stumped looks.
After all, Milwaukee is where Frederick J. Miller bought the Plank Road Brewery and founded Miller Brewing Company in 1855. "He brewed his delicious beer using yeast that he carried in his pocket from Europe," the company’s history says.
Although Miller is still brewed in Milwaukee (and elsewhere), the company is no longer based here. In 2002, South African Breweries, already one of the largest breweries in the world, bought Miller. That created SABMiller.
In 2008, SABMiller added the the U.S. business of Molson Coors, creating MillerCoors. The new company moved its headquarters from Milwaukee to Chicago, while the corporate parent is based in London.
Brewery employment has remained about the same in Milwaukee at about 750 workers, the company said in June of 2013. The number of corporate office jobs in Milwaukee, including sales and marketing and executives, declined by about 370 to 607.
What about Bud?
Meanwhile, TV ads for Anheuser-Busch’s flagship brew, Budweiser often feature a heavy Americana feel, with red, white and blue and tributes to returning soldiers and small towns. But today the corporate parent is a long way from St. Louis, where its roots date to 1852.
In a hostile takeover, the international conglomerate InBev bought Anheuser-Busch for $52 billion in 2008. Anheuser-Busch is now one of many subsidiaries and the deal resulted in hundreds of jobs being cut, including many in St. Louis.
The full name of the company is now Anheuser-Busch InBev. The headquarters is in Belgium. The company leaped over SABMiller to become the largest brewer in the world.
Before the company bought Anheuser-Busch, InBev grew from a combination of Belgian breweries, the addition of Labatts in Canada and breweries in Russia, China, Germany and Brazil. Since then, the company has added Mexico’s Grupo Modelo, according to a history on the company’s website.
"I don't think the tax code was a driving factor for any of the mergers," said Eric Shepard, executive editor of Beer Marketer’s Insights, a trade publication.
"AB InBev was more about other synergies," he said. "They probably don't mind a lower tax rate, however."
In addition, moves into new markets are necessary because beer sales are flat in the United States and Europe, according to a Sept. 3, 2014 profile of AB InBev in Forbes.
"Amid stagnating beer sales in developed markets, comprising North America and Western Europe, the brewer has looked to tap into the growth potential of emerging beer markets such as Brazil, Mexico, China and South Korea, mainly by acquiring small regional brands and leveraging its strong marketing and advertising muscle," the article said
Ryan cited two well-known beer makers -- including one founded in Milwaukee -- when asked about inversions. He said the parent companies of Miller and Anheuser-Busch are located overseas. They were part of a long-standing and rapid world-wide consolidation of the major breweries.
We rate his statement True.