When Corporations Flee

Robert Knight
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Posted: Sep 16, 2014 12:01 AM
When Corporations Flee

Socialism in its many guises depends on the use of force. Its animating principle – envy – means seizing wealth and redistributing it. This rankles those who earn the money in the first place.

Taken to extremes, socialism becomes communism. This variant turns entire countries into armed prison camps, like North Korea. For nearly three decades, the Berlin Wall kept East Germans from fleeing to freedom in West Berlin before the Wall came down in 1989.

Less odious regimes still inflict absurd economic policies on their populations. When Jamaica was ruled by Cuba-backed socialists in the late 1970s, importers were forced to “assemble” products so that they could be stamped with a “made in Jamaica” label. This led to absurd repackaging schemes. I recall a major American-produced baby powder labeled as “made in Jamaica.”

Possibly the worst example was the rule that wine could be imported only if it were concentrated and reconstituted. You didn’t have to be a French connoisseur to see that this wasn’t good. I drank some. It was ghastly. It made the jerk chicken taste like … well, not chicken.

Undeterred by history, America’s own leftists constantly work to use government power to stoke envy, redistribute earnings, and threaten the private sector with a promise that “the beatings will continue until morale improves.”

At 35 percent, the United States has the highest corporate tax rate in the industrialized world. Hence, in Atlas Shrugged fashion, some companies are telling Uncle Sam they have had enough. In a whopper of a deal, Miami-based Burger King has announced an $11-billion takeover of Canada’s Tim Hortons coffee shop chain. Early reports had the company moving operations north of the border. In the face of critics who charge BK with being unpatriotic, the company insists that the mega fast food chain’s headquarters will remain in Florida – but it will secure tax savings if its holding company moves to Canada. Can you blame them?

More than a dozen U.S. firms have followed suit over the past year, including Charlotte-based Chiquita Brands International, which is in merger talks with the Irish company Fyffe’s and could move the combined firm’s headquarters to low-tax Ireland.

So how do America’s kleptomaniacal politicians react to this kind of news? Do they lower the tax rates? Trim regulations? Offer incentives? No. None of that. They go bananas, reaching around for a big stick, preferably spiked.

Treasury Secretary Jack Lew told an Urban Institute seminar on Monday (Sept. 8) that Obama Administration officials are considering unilateral executive action against U.S. firms. Well, of course they are. They’re jackrabbit quick to assert power whether or not it’s constitutional. As the president said in another context, “we can’t wait” for Congress to act.

The congressional tortoise is stirring, however. Sens. Charles E. Schumer (D-NY) and Richard J. Durbin (D-IL) have drafted a bill to punish companies that move abroad. They rail against what they call “tax inversion.” They want to take back tax breaks even from companies that moved operations abroad as far back as 1994. In essence, they want to build a fiscal Berlin Wall to keep corporations captive.

This doesn’t work, especially in a fast-moving global economy “where capital is mobile,” as General Electric Vice President John Samuels told the same Urban Institute audience that Mr. Lew addressed.

Now, I’m for encouraging American-made goods and American employment. Too many manufacturing jobs have been lost overseas. We can rebuild by removing barriers to cheaper energy, and by lowering taxes and cutting red tape, not by imposing punitive schemes beloved by socialists.

Unfortunately, some U.S.-based corporate executives don’t see beyond the glittering promise of borderless globalism. When they aren’t packing their bags for tax havens, some are lobbying politicians to turn a blind eye to massive illegal immigration in order to keep down labor costs. Liberals, despite their union base, seem to have no problem with this. They’re seeing millions of undocumented Democrats pouring in.

Speaking of unions, labor leaders were all for Obamacare’s heavy hand, until they found out that it threatened their own, gold-plated health plans. Then they cried like stuck pigs. Perhaps this was one of the prime reasons why then-House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) rammed through the massive Affordable Care Act before anyone could read it.

The sheer size of government is the major factor in all this corruption. If the government were not so powerful, businesses would not have to buy protection from politicians, nor could they so easily leverage government power to hurt competitors.

Now that summer is over, Congress is back for a few days before heading out to campaign. Democrats will pretend they are small-government conservatives, while Republicans will duck and roll to avoid the media’s gaffe patrol.

Somehow, it is hoped, the true colors of all will shine through.