When politicians try to tax corporations to death, the corporations are likely to take rational action.
What would the U.S. economy look like if there were eleven new companies the size of Pfizer?
A little back-of-the-envelope math: If those eleven companies each employed about the same number of people as Pfizer, that would be the better part of 1 million new jobs, which would take care of about 13 percent of those Americans currently jobless-- and if they got nice Pfizer wages, too, so much the better. There would be an additional $2.1 trillion in the pension funds and individual retirement accounts invested in those companies' shares. If those firms paid taxes comparable to Pfizer's, their annual tax payments would exceed the annual total revenue of...
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But we aren't getting eleven new Pfizers. In fact, we're losing the Pfizer we have.
Pfizer is merging with a smaller Irish pharmaceutical company, Allergan, and the legal headquarters of the new enterprise will be located in the Republic of Ireland rather than in the United States. The main reason for this is the U.S. corporate tax, which is effectively the highest in the developed world (it is exceeded on paper by the corporate tax of one very poor country, Chad...
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Merging with a small firm overseas and relocating the corporate headquarters to a friendlier tax environment is called a 'corporate-tax inversion,' and the maneuver, though entirely legal and ethical, cheeses off the sort of people who'd like to get their hands on a chunk of that corporate cash and use it to fund favors for their political supporters. (Also legal, though not obviously ethical.)
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Capital just wants to be loved. It will go where it is most welcome. And try as they might, the politicians can't stop it.
(Excerpt) Read more at nationalreview.com ...
