The Huffington Post is beside itself with indignant rage over companies moving their headquarters overseas to avoid paying the highest corporate income tax in the industrialized world. Feeling that Secretary Jack Lew was onto something when he accused companies of being economic traitors for reducing their tax burden, the HuffPo let loose a string of economic illiterate ramblings about the indecency of corporate profits.
Early last week, the drug firm Mylan stomped on the Stars and Stripes as it ditched America for the Netherlands. Then, on Friday, the drug company AbbVie similarly renounced America. For 30 pieces of silver, it will become Irish. Medical device maker Medtronic deserted America for Ireland last month. The pharmacy chain Walgreens recently announced it may be next. It plans to dump the land of the free for the bows and scrapes of royal subjects.
Is it just me, or does their article read like they just got dumped by the cool kid in high school? Of course, it got better as the article rambled on about corporations’ economic duty to pay taxes. (Because, ya know, America is so well known for its love of high taxation. Just ask those Colonists in Boston.)
[These companies refuse] to pay taxes on foreign income to the country that nurtured them, protected them from patent violators and unfair competitors, and provided them with educated workers, federally-sponsored research and development, and myriad other public services. Now, they can freeload instead. As a result, their U.S. competitors, as well as hardworking Americans, will pay more to cover the shirkers’ share.
Oh, right… Now I get it. These evil capitalist organizations didn’t actually build their businesses themselves. No, no, no… It took the benevolence of government funded programs to make success possible in America. And, furthermore, they are now forcing domestic competitors and hardworking Americans to foot the bill for such government success stories like Healthcare.gov, Dodd-Frank, the EPA and the FDA. (Deep breath… The sarcasm is getting a bit thick here.)
I guess it would probably be useless to explain to HuffPo that most big corporations dedicate entire legal teams to fighting the effects of well-funded government. Yeah, patent protections are important. But let’s be honest: the real “problem” progressives seem to have, is that the government is no longer getting 35 percent (almost 40 percent when state taxes are taken into account) on money that these companies earn overseas.
In other words: The liberal rag seems upset that money made in Ireland by an otherwise American company, will remain in Ireland… Yeah, the horror. I mean, profitable companies tend to employ more people, contribute to more charities, invest in more communities, and ultimately broaden the tax base by increasing the household wealth of working families… But, I guess the some Liberals believe government would spend that money better, right?
Well… Yeah. That is what our economically challenged “patriots” over at the internet’s version of MSNBC believe. When Bill George, with Medtronic, defended his company’s tax inversion (fancy-talk for moving headquarters to a jurisdiction with a more amicable tax burden), the HuffPo huffed and puffed that government was a better steward of corporate funds than evil profit-seekers (AKA: investors, shareholders and executives):
George said tax evasion was hunky-dory: “The only reason they’re doing the inversion is to free up the cash overseas. . . That money today can’t be put to good use right now.” That, of course, isn’t true. It could be put to good use immediately if Medtronic paid the federal income tax the company owes on it.
Whoa… I am almost overwhelmed. First of all, anyone (Democrat, Republican, Liberal or Conservative) that says government is an efficient steward of capital, obviously hasn’t heard about the taxpayer funded study on seahorse sexuality; or the DMV; or healthcare.gov; or the Veterans Administration; or the GAO’s lavish conferences; or … Well, I could go on, but we have limited space left in this column.
More importantly, none of these companies are evading taxes. And words do matter in this case. Tax evasion is what ultimately landed Al Capone in jail, because it is illegal. Evasion is the criminal act of sheltering cash in dishonest and coercive ways with the intent of dodging a legitimate tax.
Tax avoidance is what the rest of us do when we take the mortgage tax deduction, earned income tax credit, standard deduction, interest deduction, or retirement contribution exemption. In other words: avoidance is the legal act of lowering one’s tax burden. And while the writer over at HuffPo undoubtedly lets TurboTax find him a couple extra credits and deductions, it’s apparently sacrilege for a company to do the same.
Because, in the end, that is the reason for these tax inversions. CEOs, executives, and company boards have a fiduciary obligation to keep the cost of doing business (which includes taxation) at a minimum. Imagine all the new drugs Pfizer will soon be able to fund, now that they aren’t paying 35 – 40 percent of their overseas profit to an inept American government.
As angry as liberals might want to get at a company for increasing their profit, can’t we take a minute to recognize that profits are pretty much the reason for America’s historical prosperity? Businesses, like it or not, operate off of the concept of getting a return on their investment. And when business is more profitable overseas (especially in Socialist Europe) than in the “Land of the Free”, we might have a bit of a problem.
Rather than address the underlying cause of inversion, Liberals would like to demonize, insult, and attack businesses for moving their cash out of the reach of Uncle Sam. Strangely, the HuffPo never mentioned lowering the corporate tax burden, or making the American tax code more competitive with the socialized nations of Europe.
Much like our liberal friends, I would rather have companies repatriate their overseas profits to America as well. Of course, the progressive “solution” to tax inversion seems to be… new punitive taxes on companies that want to move overseas. Now, I understand that Liberals feel entitled to the profits of those capitalist pigs who are avoiding the highest tax rate in the world, but even I know that 12 percent (Ireland’s tax rate) of billions of dollars is more than 35 percent of nothing. (And I didn’t even take Common-Core math!)
You want those evil capitalists to bring their money home? Stop trying to take all of it.