The media and many of the powers that be in Washington would like us all to believe that much like Nathan Lanes character Albert Goldman in the film The Birdcage that they feel too betrayed and bewildered. Not at learning of another Dolphins loss, but rather the fact that many companies are deciding to renounce their American citizenship and engage in what is called an inversion and moving their corporate headquarters to a foreign locale.
Here at Markowski Investments and the Watchdog on Wall Street Radio Show are not buying what they are selling. The outrage you are hearing is for public consumption. Nothing is going to be done about this practice. It has been going on for quite some time and it will only take a couple of nice fat checks written to certain political action committees or some other fundraising efforts to make the issue vanish.
However, many Americans are still outraged that CEOs would engage in what they believe is such a horrific practice.
How dare they move their corporate offices offshore! That is so un-American.
You might be surprised to hear this, but I have no problem whatsoever with their actions.
A Chief Executive Officer has a fiduciary responsibility to his shareholders. If the tax code allows for him to take part in an inversion, where it will save his shareholders money, then the CEO is obligated by that fiduciary responsibility to engage in the transaction.
One might say that it is not fair.
It is not right that large corporate entities can conduct this type of a deal and the small business owner cannot. Jonathan Alter the far-left columnist at the Daily Beast is advocating for loyalty oaths. He stated that because, unpatriotic companies are relocating outside of the United States in record numbers to avoid high taxes, it is time think creatively of a way to force them to remain.
How awesome! Just think, America can craft its own Berlin Wall for business.
Walls are not just made to keep people out but to also keep people in. Here is a better idea. How about making America a better place to do business? How is that highest corporate tax in the entire world working out for us? Rather than compete, the left wants to bring back the Stasi.
The reality is that a corporate tax is nothing more than a tax on the consumer. Businesses price the taxes that they pay into the products and services they provide. Technically speaking, the corporate tax makes corporations the most effective tax collectors in the world. Due to the fact that larger corporations can navigate the seventy thousand page plus tax code with much better ease than small business; not to mention, that they also aid in writing a code that best suits their needs. Of course this is due to the access that they have to politicians, which in turn does make the system incredibly unfair.
Rather than being outraged at corporate Americas ability to navigate the system, we should direct our energy at ridding ourselves of the system itself. True tax reform would be the stimulus package to end all stimulus packages. Equality under the law and the ability to compete on a level playing field would lead to tremendous growth and job creation.