Get ready for a wave of American companies moving overseas

Get ready for a wave of American companies moving overseas
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Corporate America is about to get a lot more international. Lawmakers in Washington, D.C., are warning that big U.S. companies like Walgreens could begin fleeing overseas in droves to avoid paying taxes, according to The Washington Post. The tactic, known as "tax inversion," could cost the economy $20 billion in tax revenue over the next decade, says Congress' Joint Committee on Taxation.

Here's how it works: an American company buys a smaller foreign company, usually from Europe, where corporate tax rates are lower. The headquarters are technically moved to Europe and presto — the company no longer has to pay U.S. taxes on foreign profits that would normally have to be repatriated. The scheme has become much more popular, putting pressure on other U.S. companies to consider changing their address.

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Ryu Spaeth

Ryu Spaeth is deputy editor at TheWeek.com. Follow him on Twitter.