Forbes published this article about companies moving their headquarters out of the US in order to avoid taxes in early July. Allan Sloan is angry:
Before we proceed, a brief confessional rant: The spectacle of American corporations deserting our country to dodge taxes while expecting to get the same benefits that good corporate citizens get makes me deeply angry. It’s the same way that I felt when idiots and incompetents in Washington brought us to the brink of defaulting on our national debt in the summer of 2011, the last time that I wrote anything angry at remotely this length. (See “American Idiots.”) Except that this is worse.
Inverters don’t hesitate to take advantage of the great things that make America America: our deep financial markets, our democracy and rule of law, our military might, our intellectual and physical infrastructure, our national research programs, all the terrific places our country offers for employees and their families to live. But inverters do hesitate–totally–when it’s time to ante up their fair share of financial support of our system.
Inverting a company, which is done in the name of “shareholder value”–a euphemism for a higher stock price–is way more offensive to me than even the most disgusting (albeit not illegal) tax games that companies like Apple AAPL 0.01% and GE GE 1.15% play to siphon earnings out of the U.S. At least those companies remain American. It may be for technical reasons that I won’t bore you with–but I don’t care. What matters is the result. Apple and GE remain American. Inverters are deserters.
Even though I understand inversion intellectually, I have trouble dealing with it emotionally. Maybe it’s because of my background: I’m the grandson of immigrants, and I’m profoundly grateful that this country took my family in. Watching companies walk out just to cut their taxes turns my stomach.
Okay, rant over.
I agree with the author; I don’t think we can stem the tide of companies leaving the US by changing tax rates. Discourage them, slow them down, maybe. It’s going to take a complete overhaul of the way the USA brings in and distributes money to make a difference in the official headquarters of companies. We need to do this anyway, to make the funding of our government and its services more equitable all the way around.
Which also brings up the point, how do we get the cash out of all those who get benefits but who currently do not pay the full price for the services they receive? Like Hyundai, whose Korean factories are protected by the US military, paid for in part by their US competitors? I would argue that we really need to minimize our spending on the rest of the world. At least the developed, or as in Korea, nearly developed world.
The topic of inverters is infuriating, but it’s really so much bigger than that.