‘Inversion’ and Economic Patriotism as the Last Refuge of Stupid Pundits and Lazy Politicians

Unpatriotic American
corporations are fleeing the United States for foreign climes in a
suddenly headline-grabbing practice called “inversion.”
It’s desertion, damnit. Or as Fortune‘s Allan Sloan
puts
it in breathlessly stupid form, “Bigtime companies are moving
their ‘headquarters’ overseas to dodge billions in taxes … that
means the rest of us pay their share.”

He continues:

Ah, July! What a great month for those of us who celebrate
American exceptionalism. There’s the lead-up to the Fourth,
countrywide Independence Day celebrations including my town’s local
Revolutionary War reenactment and fireworks, the enjoyable days of
high summer, and, for the fortunate, the prospect of some time at
the beach.

Sorry, but this year, July isn’t going to work for me. That’s
because of a new kind of American corporate exceptionalism:
companies that have decided to desert our country to avoid paying
taxes but expect to keep receiving the full array of benefits that
being American confers, and that everyone else is paying for.

Yes, leaving the country–a process that tax techies call
inversion–is perfectly legal. A company does this by
reincorporating in a place like Ireland, where the corporate tax
rate is 12.5%, compared with 35% in the U.S. Inversion also makes
it easier to divert what would normally be U.S. earnings to
foreign, lower-tax locales. But being legal isn’t the same as being
right. If a few companies invert, it’s irritating but no big deal
for our society. But mass inversion is a whole other thing, and
that’s where we’re heading.

It’s legal to emigrate? When the fuck did that happen?
And you still have access to the old digs’ markets? For shame.

Yeah. I was feeling bad about leaving my former fellow New
Yorkers holding the bag for that state’s mugging-worthy tax take
when I split for Arizona. Not. I got out of that abusive
relationship, thank you.

I’m not exactly sure what “pay their share” of taxes means,
though I hear that particular whine a lot when people and their
businesses flee from the
U.S. to Singapore,
California to Texas, or from Maryland to Pennsylvania.
Everybody left behind supposedly has to pick up the remainder of
some fixed tab.

But except for extortions of fixed weights of gold and gems
imposed by conquerors of antiquity on their prostrate subjects,
taxes are rarely set as sums to be divvied among the suffering
masses, but rather as percentages of economic activity. If the
local powers that be make their digs so unattractive—say, with a
corporate tax rate of 35 percent while the competition asks 12.5
percent—there’s going to be less economic activity to get a share
of.

Not that there would be anything wrong with fleeing a fixed
sum.

We see the same phenomenon within the United States, with people

migrating from state to state. The migrations appear to be
heavily driven by
both taxes and respect for personal freedom (politicians can
fuck things up in lots of ways, and not all of them involve tax
rates).

What’s Sloan’s solution?

My answer: Fight to fix the tax code, but don’t desert the
country. And I define “fiduciary duty” as the obligation to produce
the best long-term results for shareholders, not “get the stock
price up today.” Undermining the finances of the federal government
by inverting helps undermine our economy. And that’s a bad thing,
in the long run, for companies that do business in America.

Yeah, well. This country was settled by people who “deserted”
some place else because things were better here. If the powers that
be can’t find it in themselves to keep things better,
there’s no good reason to not desert again—ludicrous appeals to
self-sacrificing patriotism notwithstanding.