Exporting Corporate Headquarters and Importing Broken Families
There is a phenomena based on quirky tax policies that have fostered in an era of formerly United States based corporations moving their headquarters and thus their tax status from the United States to such locales as Ireland. The reason is lower tax rates. Corporations are people, bound by the covenants of their corporate structure to make economic decisions that enhance their shareholder wealth.
Known as “inversions”, corporate headquarter decisions based on taxation make the corporate move economically demanding. “Recently, the UK joined countries such as Ireland, Switzerland, and Canada as targets for inverting when it adopted a territorial tax. At the same time the UK also lowered its rate (from 25% to 20% by 2015). “
The counterintuitive result of these tax exits is that the stock of the companies (Walgreens, Pfizer, et al), once they have decided to move their headquarters, soar in anticipation of the larger bottom line. Thus, as corporations flee the tax burden of the United States, the United States stock market indexes, containing these stocks, soar as well. The country loses corporations, the country loses the tax revenues, and the country’s stock market indexes reach all time highs. A hall of mirrors at the county fair is more reflective of reality.
What is warranted is a flat corporate tax rate in the United States. Flat tax coupled with a phasing out of deductions and depreciations. Make it simple. Make it competitive. Leadership is where, exactly?
And we import. Broken families send their children to the United States borders. The federal government, in a roundabout backward way, has encouraged these actions. Is it the federal government that mistakenly promotes this breakup of families? Sure it is.
Is it also the misguided policies of this federal government that makes it economically damaging for an unwed mother in the United States, supported by federal and State programs…. to get married? (She may lose those State and Federal assistances). You betcha. And it even makes sense for that unwed mother to have more out of wedlock children, because she will get more aid.
What leadership has molded this tragically destined model of exporting wealth creation and importing the dependent and reliant? Oh, Margret Thatcher, you were so correct. Policies such as these eventually run out of “other people’s money”. What Maggie didn’t see was a Federal Reserve that was willing to bankroll the debt creation that surged beyond revenue generation.
In a market, in a land far away, in a distant galaxy, such squandering of the requested 3.7 billion for control over these foreign children (can I say that?) would have made the credit markets twitch. Gone is the market discipline to the cavalier creation of new debt. It was such an inconvenience, right, Janet Yellen?
But the dollar bears will win, for more of something, made out of nothing, will eventually be worth…. nothing. Right, Janet? Where will we find you when this occurs? Living off the “cost of living adjusted pensions” that all the likes such as yours have locked yourselves into? What a nice backstop for you and the results of your wayward monetary policy.
Where can we all sign up?