Let’s Play “Name the Policy”

Courtesy of the Democrats on the House Ways and Means Committee, here’s a list of “corporate inversions”, companies that have “exited the U. S.” for tax reasons, over the last 30 years. It used to be rare but now it’s pretty common.

Although nearly twice as many companies have “inverted” during the Obama Administration as did during the Bush Administration, that’s just continuing an ongoing trend. Many, many more businesses fled the U. S.’s high taxes during the Bush Administration than during the Clinton Administration.

Now for the interesting part. Do we care? If we care, what policies should we put in place to change matters?

I think we do care for a whole host of reasons from revenue to employment to status. We should bring our corporate tax policies more into line with those of other major economies. That would mean lowering tax rates, taxing corporations only on their domestic earnings rather than their global earnings, etc.

Of course, you could always try punishing them for leaving. The beatings would, presumably, continue until morale improved.

2 comments… add one

  • steve

    This is why I have advocated for doing away with the corporate income tax. As we all, I hope, know, US corporations actually don’t pay more taxes than corporations in other countries. Effective tax rates are on the lowish middle side (from memory). The problem is at least two fold. One, we have started a race to the bottom. Other countries have offered even lower rates. Corporations are moving to take advantage of those rates. That is relatively safe to do since they rely upon the powers of the US to keep them safe even when they move out of country. In this kind of race there is no winner. Might as well bite the bullet and do away with the tax.

    Next, the tax is a major source of corruption. Corporations are also spending huge amounts to avoid paying the tax. Given that corporate income taxes are a shrinking source of revenue, and have been for years, we should just do away with it and find other sources. (The next time a classic liberal complains about how th progressives are winning just remember what has really been going on with corporate taxes.)

    Steve

  • Ben Wolf

    That was Minsky’s point as well, steve. The tax serves no useful function other than to make liberals feel good about “getting” corporations and encourages bad behavior in the quest to avoid it. I’d rather focus on improving the lives of people at the bottom than punishing people at the top.

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