The latest print edition of National Review offers the following blurb about corporate tax “inversions.”
“I don’t care if it’s legal — it’s wrong!” So said President Obama of the practice of so-called corporate tax inversions, in which firms legally reincorporate overseas, escaping the rapacious U.S. corporate income tax. The United States maintains the highest corporate tax in the developed world, and, with North Korea and Zimbabwe, is one of a tiny handful of countries (most of them backward) that seek to apply their corporate tax to the worldwide operations of domestic companies. Congressional Democrats have introduced legislation to punish the firms they call “corporate deserters.” Presidential henchman David Plouffe has gone so far as to accuse rivals of “economic treason.” As rhetoric, this is toxic. It treats responding to economic incentives like an act of treachery — you don’t have to be Benedict Arnold to read a balance sheet. As a matter of law, the proposed legislation is foolish and selective. Even as they abominate these so-called deserters, Democrats have helped pour millions of dollars into the coffers of firms such as Eaton and Delphi through cash grants for green-energy work; Eaton is incorporated in Ireland for tax purposes, Delphi on the island of Jersey. This represents a classic behavior pattern of the Left: create a set of deeply stupid economic incentives and then denounce those who respond to them. If it is unpatriotic for companies to move economic activity abroad, what should we call lawmakers who push them to do so?
