In one sentence: Continuing the tax question from 482, Phil and Danielle talk about corporate tax rates and headquarters moves, and about what it means to own a fraction of a business whose actions you may or may not agree with, including the ESG and DEI fights over investors' values.
Key ideas
- Why companies move. Phil says US corporate tax was 35% federal plus state in 2007, against low-20s abroad, and that the 2017 cut to 21% ended the flow of big US companies leaving. He says none have moved since, which is his claim from a search, not something to quote as fact. [04:00–12:00]
- Two reasons for the examples (AbbVie, Medtronic, Burger King, Mylan and others). One is a lower home-country tax rate, and the other is access to the EU as a local company. Brexit pushed some firms out of the UK for the second reason. [07:00–09:30]
- Moving costs a lot. Danielle notes it takes money, time and people, so a headquarters change only happens when the math is clear. Phil adds that tax changes can set the cycle going again. [10:00–11:00]
- Think like an owner, not a holder of paper. Phil's recurring point: a stake in a business makes you a part-owner of how it treats employees, how it pays executives and what it does. Danielle says the long time you spend with an owned company should be well spent, so values alignment is part of the return. [13:30–18:00]
- Values are now part of the conversation. Phil says consumer and shareholder pushback (Bud Light, Tractor Supply's DEI rollback) show that customers and owners watch what a company stands for. The hosts disagree on the details of DEI, and the notes keep to the investing point: owners should know which side they are on. [18:00–22:00]
- ESG, as they describe it. The idea was a score for environmental, social and governance practice, and Berkshire famously did not fill in the forms. Phil calls the way funds used scores "blackmail" and Danielle disagrees, calling it incentives. For an investor the lesson is that big index managers hold a lot of voting power for money that belongs to others. [22:00–31:00]
- You are not voting with a fund. Phil says an ETF holder has made no active choice, and a handful of people effectively decide how those shares are voted. Danielle's version is that this is why she wants to make her own decisions. [31:00–34:00]
- Long-term owners buy stability. Danielle argues that long-term shareholders let a company take unpopular decisions without losing the stock price or the CEO's job. Phil adds that he likes family-owned companies for the same reason. [34:00–36:30]
- Open questions for next time. Should you hate or love companies that leave America, and should you avoid becoming big and international in favour of local firms? [36:30–37:30]
How it maps to RuleOne
- The Love step of Rule #1 is where this lives: do you want to be an owner of this business for decades?
- Management checks on /stock/TICKER/ (insider ownership, compensation) are where ownership structure shows up. Family-owned or founder-led names can be found by looking at insider stakes.
- /holdings/ is the place to ask whether you would be comfortable defending each position.
Buffett, Munger and Graham links
- Buffett's Berkshire letters repeatedly stress long-term owner mindset and a "shareholder base of owners, not renters" (check the exact wording in the annual owner's manual before quoting).
- Graham's Intelligent Investor ch. 1 and ch. 8 frame the stockholder as a part-owner of a business.
- On ESG forms, the show says Buffett declined to complete them. Phil says this from memory, so verify before relying on it.
Words to know
- ESG: environmental, social and governance scoring of companies.
- Index fund / ETF: a fund that holds a basket of stocks passively. The fund manager, not the investor, votes the shares.
- Repatriation: bringing cash held abroad back to the home country.
Try this
Open /holdings/ or pick a company on /stocks/. Write one page: "What does this company do that I would defend as a part-owner, and what would make me sell on principle?" Compare it against its insider ownership on the stock page.
Check yourself
- What two reasons does the episode give for a company moving its headquarters to Ireland or the Netherlands?
Answer
A lower tax rate, and access to the EU market as a local company. - Why does Danielle say long-term shareholders matter?
Answer
They let management make unpopular decisions without a price collapse or a fired CEO. - What does Phil say an ETF holder lacks?
Answer
An active choice and a vote. The fund manager controls the voting.
Short quotes
"We're owners. Not an investor, not a trader." (Phil, ~13:40, auto-transcribed)