Three patrons play slot machines in the Hollywood Casino at Penn\National Race Course in Grantville, Pennsylvania, U.S., on Tuesday, Feb. 12, 2008.BRADLEY C BOWER
U.S. lawmakers have a new conundrum to work through: whether or not to stop American companies from adopting trust structures to skirt their corporate taxes.
Sound familiar?
It should. Though the problem isn't exactly the same as Canada's, the root of is precisely why Ottawa kiboshed Canadians' beloved income trusts.
As the Financial Times notes, corporations south of the border ranging from timber producers to prison groups to outdoor advertisers are converting to REITs. The latest to make the switch is Penn National Gaming, which divided into two companies, one of which is a REIT, and the other will rent space from the REIT.
To convert, U.S. companies must get approval from the Internal Revenue Service, and the FT says the agency has been "liberal in granting such requests."
Will U.S. lawmakers learn from Canada and crack down on the emerging trend before it kicks into high gear? Who knows. But on this side of the border, we know what happens when you let retirees get used to the juicy dividends.