The degeneration of America into a Third World basket case passes an important milestone this week, as politicians consider building some regulatory walls to keep the tax serfs penned in. It is not good when your country decides kneecapping productive businesses as they run for the border is the best way to keep them from leaving. The Wall Street Journal reports:
Lawmakers will unveil bills on Tuesday to keep major corporations from leaving the U.S. for tax purposes, but the legislation probably won???t be enacted quickly enough to prevent more such exits, experts say.
It might even accelerate a few departures.
Congressional aides, lawyers and other advisers say talk of corporate exits ??? known as inversions ??? is growing, in the wake of several recent deals that have taken major U.S. firms offshore.
???I have heard from some representatives of Fortune 500 companies that their companies are exploring whether to do an inversion transaction,??? a Senate aide said last week. ???Also, I???ve heard that investment bankers are pitching companies to do inversion transactions.???
Also, our lunatic corporate tax system is keeping billions of dollars in overseas profit safely tucked away overseas. What kind of fool would move big money into the United States, where tax-hungry politicians can get it?
As the Journal mentions, the announcement of impending barriers to exit might just prompt a few fence-sitting companies to make a run for the border, while they still have a chance. Of course, the geniuses who beat the U.S. economy into a stupor over the past six years have an answer for that: make the exit penalties retroactive.
Recently, Senate Finance Committee Chairman Ron Wyden (D., Ore.) announced that he will seek to place new restrictions on corporate exits as of May 8, 2014. Mr. Wyden has not drawn a lot of GOP support for his retroactive approach, however, suggesting that the window remains open.
The legislation to be unveiled on Tuesday is expected to take several steps to minimize the ability of firms to exit. Those measures also are supported by President Barack Obama. The bill is being sponsored by the influential brothers, Sen. Carl Levin (D., Mich.) and Rep. Sander Levin (D., Mich.), who is the top Democrat on the House Ways and Means Committee.
Despite all the Democratic support, prospects for quick action appear dim. But that could change if more companies head for the border.
Remember stories like this, the next time you’re wondering how “uncertainty” might be retarding economic growth. At the moment, certain businesses are uncertain about whether they need to pack everything into jets and head for a more stable business environment before Democrats get the manacles around their ankles… or whether making such plans is going to provoke these greedy politicians into launching the crackdown they fear.
Bloomberg Businessweek counts 14 big corporate inversions since 2011, and mentions the big name that’s making politicians nervous: Pfizer, Inc., which is looking to buy British drug company AstraZeneca, at which point it would save the new super-corporation billions of dollars per year to shift its headquarters outside the United States. U.S. corporate taxes have made it a no-brainer for any sizable company that can perform an inversion to do so. Democrats are poised to give them an incentive to do it as quickly as possible.
Sen. Wyden’s bill at leas includes a promise of corporate tax reduction to go along with the exit barriers, but a corporate tax cut probably isn’t going to fly when Obama Democrats are looking to suck another $17 billion out of the private sector over the next decade. The U.S. business environment is only going to grow more forbidding, if the political class abandons all pretense of competing on the international stage, in favor of using extortion rackets to keep captive corporations from escaping.
If the U.S. economy was performing anywhere near its true potential, instead of carrying parasitic government around on its aching back, we wouldn’t have to talk about setting up booby traps to keep money from escaping. I’ve got a newsflash for these greedy socialists: the kind of nervous stasis you’re trying to create with these regulatory threats isn’t going to generate enough taxable economic activity to keep your schemes floating for much longer. It would already be difficult to grow our way out of the fiscal sinkhole our government has become, even if we get started on pro-growth reforms right away. Frighten the most productive companies into running away before iron gates are slammed over their escape routes, and we’ll have no chance at all.