Simple Solution To Corporate Inversions: Cut Tax Rates

Investors.com ^ | August 28, 2014 | Charles Krauthammer

[jazusamo]

The Obama administration is highly exercised about "inversion," the practice by which an American corporation acquires a foreign company and moves its headquarters out of the U.S. to benefit from lower tax rates abroad.

Not fair, says Barack Obama. It's taking advantage of an "unpatriotic tax loophole" that hardworking American families have to make up for by the sweat of their brow. His treasury secretary calls such behavior a violation of "economic patriotism."

Nice touch. Democrats used to wax indignant about having one's patriotism questioned. Now they throw around the charge with abandon, tossing it at corporations that refuse to do the economically patriotic thing of paying the highest corporate tax rate in the industrialized world. Odder still because Democrats routinely ridicule the very notion of corporations as persons.

When Mitt Romney suggested this in 2011, Democrats mocked him right through Election Day. In the Hobby Lobby case, they challenged the very idea that corporations can have religious convictions. But now Democrats are demanding that corporations exercise a patriotic conscience. Which is it?

Moreover, corporations have an indisputable fiduciary responsibility to protect shareholders' interest. Surely Walgreens betrayed this duty when it caved to administration pressure and canceled its plans to move its headquarters to Switzerland. The inversion would've saved it billions of dollars. Its cancellation caused an instant 14% drop in Walgreens shares.

But the Democrats' problem is deeper. Everyone knows why inversions are happening. America's 35% corporate tax rate is absurdly uncompetitive. Companies are doing what they always do: legally lower their tax liabilities.

[Fungi]

Patriotism is the last refuge of a scoundrel—Samuel Johnson. RATS don't give a damn about “patriotism.” Their definition only gets in the way with their need for control and taxation, and keeping themselves in perennial power to reign over control and taxation. RATS never met a lie they did not take advantage of—similar to never letting a crisis go to waste.

[ClearCase_guy]

Cut???

Who wants a cut????

I want the Fair Tax. It’s far more than a mere cut.

[plain talk]

U.S. Corporate tax rates are the highest in the industrialized world. The obvious answer is to reduce tax rates.

[jazusamo]

Exactly, it’s a no brainer.

[Secret Agent Man]

cutting tax rates would signal democrats want to encourage that behavior.

[jazusamo]

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[asinclair]

I respectfully submit that just about everyone has blinders on with regards to the federal taxing of corporations. People appear to believe that corporate tax payments come from "somewhere", when in reality those payments come out of your pockets, my pockets, everyone's pockets who buy what the corporations sell. That is the cruel fact of the debate that no one mentions.

So what the tax-and-spend boosters are doing is hiding the real tax rate you pay in your State, and in your country, by burying some of the taxes in the levys against the corporations. Hey, how to pull in more money without ballooning the bottom line on voter's 1040.

But wait! The hidden-tax scam is backfiring. The Big Spender, and his bankers, are complaining that corporations are taking that tax money collected "under the table" and shipping it out of the country, instead of bloating the government coffers. The "forum shopping" that corporations use are not available to the rank and file -- we don't have the ability to have a "tax home" in another country. All that revenue that are not seen as taxes by the voters are taking a hike across the pond. The magician's trick went sour.

My remedy is simple: taxes should be paid only by people. Shareholders pay taxes on the money they receive from corporations. Shareholders pay taxes on the profits earned by the corporations, on a per-share basis. Corporations no longer have to hide the taxes they pay into the prices they charge. Let the Democrats repeal Citizen's United -- that would give even more reason to stop taxing "non-people". No free speech, no taxation.

In order for my proposal to be revenue neutral, though, individual tax rates would have to rise to capture the same revenue that the corporate tax rate currently contributes. Such a tax increase would be offset by the taxes not built into the cost of goods and services.

Why this will never happen: it makes tax increases transparent to the voters -- they can see the rise in taxes. No more sleight of hand.

[jazusamo]

Well said, and there’s politicians in both parties that believe the status quo is just fine.

That’s the reason we have the highest corporate tax rate of any industrialized country.

[amnestynone]

Is everyone here crazy? We let these people stab us in the back repeatedly and jam amnesty down our throats and then we support lowering their taxes. Did anyone hear about big government conservatives thirty years ago when we started lowering their taxes?

Both the corporate chamber of commerce Establishment and the Dem's claim they are working together “to get things done”. What are they getting done? Spending our money that is what. If they spend it they should pay for it. It is as simple as that. These people are only conservative if it affects there bottom line. The less in taxes they pay than the more they will spend. They are now helping the Dems set up a permanent Dem majority by supporting amnesty and everybody here wants to cut their damn taxes. Forget about it. Mister you sell out than you shell out.