News that Pfizer, the world's largest pharmaceutical company, plans to buy Britain's AstraZeneca for $106 billion, renounce its U.S. citizenship, and declare itself a British company, has jolted Congress.
Pfizer is being denounced as disloyal to the land of its birth, and politicians are devising ways to stop Pfizer from departing.
Yet Pfizer is not alone. Hedge fund managers are urging giant corporations like Walgreens to go nation-shopping for new residences abroad to evade the 35 percent U.S. corporate income tax.
Britain's corporate income tax is 20 percent, and Pfizer stands to save over $1 billion a year by moving there.
In what are called "inversions," dozens of U.S. companies have bought up foreign rivals, and then moved abroad to countries with lower tax rates, cutting revenue to the U.S. Treasury.
But Pfizer is far and away the biggest.
The real question, however, is not why companies are fleeing the USA, but why our politicians continue to drive them out of the country.
Consider. Here in America we do not tax charities, churches or colleges. Yet these institutions produce a fraction of the jobs that businesses produce.
If, as a nation, we are committed to "creating jobs," does it make sense to impose the highest corporate tax rate in the Western world on our biggest and best job creators?
Is this not economic masochism?
Many governors understand that if you want something in your state, you do not drive it out with high taxes. You strengthen the magnet of low taxes. Florida wants residents of other states to move there and retire there, so it has no income, estate or inheritance tax.
For years, Rep. Jack Kemp urged the creation of enterprise zones in poor communities like Benton Harbor, Michigan, and Harlan County, Kentucky. Businesses that relocated there would be exempt from corporate income taxes.
Why not make the United States the largest enterprise zone on earth -- by abolishing the corporate income tax?
If the corporate income tax were repealed, no U.S. company would think of moving abroad, and every transnational company would think about moving to the USA.
What a message this repeal of the U.S. corporate income tax would send to corporate headquarters worldwide: Relocate your company or next factory to the USA, keep every dollar of profit you earn, and either reinvest it here or take it home. Your call.
How would America benefit?