August 11th, 2014
By: Kelly Diamond, Publisher
Taxation has transitioned from being a means of providing for basic services and needs of the country into a punitive measure to socially engineer the people and their businesses.
Those who disagree are marked as being economically unpatriotic.
Not that long ago, I wrote about companies that are expatriating… or inverting… out of the United States. Walgreens was among them. They recently tried to join forces with a Swiss drugstore chain mainly to avoid the onerous taxes imposed on them at the state and federal levels here in the United States. And then, because of the stock drop from all the negative publicity, they changed their minds. But the point was to avoid paying taxes.
There are several measures by which corporations and individuals can do this. While this seems esoteric and well beyond the daily operations of an average individual, it isn’t. The average individual does something similar every year: they file for deductions. They itemize everything they possibly can to avoid paying taxes on that money: kids, property taxes, interest on a mortgage or student loan, and medical or even work expenses.
Imagine if you could no longer write off anything.
What if every attempt you made to avoid taxes incurred another fine or tax?
Well, perhaps Walgreens was not completely wrong in changing its mind after all. At first I thought it was a cowardly move to back down, but perhaps I’ve miscategorized it and would do well to call it foresight instead. Like the kids in school who kissed teacher’s ass and tattled on the fun kids, Senators Dick Durbin, Elizabeth Warren, and Jack Reed wrote a note to the President entreating him to use his executive power to deter, discourage, and ideally end corporate tax inversions.
“’We have introduced … the Stop Corporate Inversions Act, and are working with our colleagues in Congress to pass legislation as soon as possible to eliminate tax breaks for inverted corporations, including closing the inversion-acquisition loophole,’ the senators wrote. ‘However, our efforts should not preclude executive action to prevent corporate inversions. The coming flood of corporate inversions justifies immediate executive action.’”
Evidently, for the sake of “economic patriotism”, they do not rule out any executive orders that could help accomplish these ends.
Corporate inversions are when companies that are currently based in the United States, and are established in the United States, decide to become a “subsidiary” of another corporation that is planted in another country… ideally another country that has a considerably lower corporate tax rate. Countries like Ireland or Switzerland which have corporate tax rates in the 20 percent range rather than the near 40 percent range like the US, are being targeted by many pharmaceutical companies, for example.
Basically, these senators don’t like what Walgreens was attempting to do. They don’t like that other companies have already done this and are continuing to do this more in the United States than anywhere else in the world combined!
Go figure. You mean there isn’t a global corporate market for 39.1% corporate taxes amongst business owners? That’s odd. I mean, it is right up there with advocates of acupuncture being done with rusty nails. Oh well. Just goes to show you: government ideas rarely sell themselves, and often require tie-downs and punitive measures to get people on board.
You would think that a country that purports to be capitalistic in nature would try to compete! “Hey, we just dropped our corporate tax rate to 15%, come set up your offshore companies here!” Nope. I mean, it works amongst the states quite well. If you look at states like Arizona, Texas, and Florida, they have the lowest overall tax burdens in the union on both the individuals and the corporations. All the other states that get the privilege of being called a corporate hub had to buy it in some way: either through tax exemptions or subsidies.
“It would be the latest move by the Obama administration to use its authority to act where Congress will not. A provision in the president’s budget would have effectively banned inversions, and Democratic lawmakers have introduced legislation to halt or suspend them.”
I guess the legislative branch has been reduced to nothing more than window dressing in the political system? What else explains a president who, when he doesn’t get his way, just orders it anyway? When there wasn’t enough people to pass the Affordable Care Act, it got deemed into law. When the gun restrictions were dragging, Obama issued over 20 executive orders addressing gun control. I guess this should come as no real surprise then, that the class warriors of the left would go tattle and get their favored child treatment.
“What it means is that business that continues to be located in the United States that continues to benefit from the infrastructure of the United States, that continues to benefit from the national security of the United States, that continues to benefit from the supply of workers from the United States, well educated, highly motivated workers in the United States, they benefit from all those things without paying their fair share in taxes. The president believes that not only is not fair, it’s not good for the American economy. It erodes the tax base.” ~ White House Press Secretary, Josh Earnest.
Whoa! Just pump your breaks there, Mr. Earnest. Continues to benefit from the infrastructure? They still pay property taxes. They still pay FICA taxes on their employees. Everyone that uses the roads pays for the roads through fuel taxes.
Benefits from the national security of the United States?! Unless he is specifically talking about any of these ten corporations, I can make a sure wager that they are NOT benefiting from US National Security!
Oh, and continues to benefit from the supply of workers – who are apparently well educated and highly motivated? Is he serious? There is an even trade for the labor these corporations receive: it’s called a WAGE. I’ll believe “well educated” when the US manages to score better than 36th in the world. And I’m sorry, but until Americans can get off their union teats, motivated is hardly a word that should be used to describe the American worker. Our labor force is currently demanding more money for the same work for no other reason than “because they should get it”. This isn’t a merit based system we have here in the United States.
It’s not fair? What is he TWELVE? Grow up! It is totally fair. And yes, the bloated corporate tax policies of the United States will most definitely create economic refugees and erode the tax base… that’s the POINT of leaving! You don’t deserve a premium for simply being a “brand name” among countries and not providing anything particularly special. The same reason consumers buy stuff made in China is the same reason corporations are expatriating or inverting to other countries.
There you have it. I don’t know if such actions will actually be successfully taken, or if they will stick, but you should know that when terms like “economic patriotism” come into play, your business should be scared. I can only hope there is a grandfather clause in whatever legislation rolls out because a retroactive law would be devastating.