I wrote recently about the Pfizer-Allergan merger and made the case that it was a very sensible way to protect the interests of workers, consumers, and shareholders.
Why? Because companies should be allowed to engage in a do-it-yourself form of territorial taxation to minimize the damage caused by bad tax policy coming out of Washington.
The bad news is that the White House, with its characteristic disregard of the rule of law, promulgated a regulation that retroactively changed existing tax law and derailed the merger.
Now the White House has produced an infographic designed to bolster its case against inversions, which I have reprinted to the right.
You can click on this link to see the full-sized version, but I thought the best approach would be to provide a “corrected” version.
So if you look below, you’ll find my version, featuring the original White House document on the left and my editorial commentary on the right.
But if you don’t want to read the document and my corrections, all you need to know is that the Obama Administration makes several dodgy assumptions and engages in several sins of omission. Here are the two biggest problems.
- No acknowledgement that the U.S. corporate tax regime drives inversions because of high rates and worldwide taxation.
- A bizarre and anti-empirical assertion that money is spent more productively by governments compared to the private sector.
And here’s the entire “corrected” infographic.
The bottom line is there aren’t any “loopholes” being exploited by inverting companies.
Instead, there’s a very anti-growth American tax system that makes it very difficult for American-domiciled firms to compete in global markets.
The solution is a simple, low rate flat tax.
[…] it’s worth noting that the entire “inversion” controversy only exists because of America’s worldwide tax […]
[…] overreach by the Treasury Department. It deals with the Obama Administration trying to stop “inversions” by unilaterally changing the rules in ways that will hamper sensible business practices for all […]
[…] overreach by the Treasury Department. It deals with the Obama Administration trying to stop “inversions” by unilaterally changing the rules in ways that will hamper sensible business practices for all […]
[…] overreach by the Treasury Department. It deals with the Obama Administration trying to stop “inversions” by unilaterally changing the rules in ways that will hamper sensible business practices for […]
[…] White House and Treasury Department are hardly in a position to grouse, particularly because of the demagoguery and rule-twisting that have been used to discourage corporate […]
[…] economist Daniel Mitchell writes, there are two problems with aiming to curb inversions, them being […]
[…] For those worried about corporate inversions, it’s worth noting that the types of reforms listed above would make companies far less likely to […]
[…] For those worried about corporate inversions, it’s worth noting that the types of reforms listed above would make companies far less […]
[…] economist Daniel Mitchell writes, there are two problems with aiming to curb inversions, them being […]
[…] economist Daniel Mitchell writes, there are two problems with aiming to curb inversions, them being […]
this isn’t rocket science… people {and people running companies} gravitate to environments that provide them with what they need to be successful and happy… if governments create conditions that impede success… they will lose population… Chicago for example… is imploding… people of extraordinary means are leaving the city by the thousands… and taking their resources with them… in time Chicago will join Detroit as yet another example of failed progressive governance and urban misery… inversions are a wake up call to the nation… without policy reform… mediocrity… or worse awaits…
it would seem that our current decision makers just don’t get it……
There’s one big flaw in the White House’s argument…right at the top…Why DON’T we get to pick our tax rate? Isn’t that up to us? Isn’t supposed to be government for the people, by the people? That’s what I always thought…
Daniel, In light of all this, maybe Cruz’s corporate VAT in conjunction with a flat personal income tax doesn’t look all that bad.
Yes, we’re here to “save” the economy but we’ll napalm the survivors yet…
I think I may have said this once before, but is worth repeating. An old codger once said to me: “Why wish for a piece of bubblegum when you could just as easily wish for the world?”
So, I argue for completely eliminating corporate income taxes. Then imagine the impact to corporate I nversions, job emigration, onshore investment, the corporate division of the IRS, cronyism via the tax code, etc.