The CFS is on a tear because U.S. corporations are increasingly attracted to the strategy of “tax inversion,” buying a foreign company and relocating the corporate headquarters where the acquisition is domiciled, escaping the 35 percent U.S. corporate tax rate—more like 40 percent with state taxes—by far the developed world’s highest.
The U.S. Treasury takes a hit because of this, but then the Treasury’s been taking a long, ongoing hit for years because of taxes it doesn’t collect when U.S. companies decline to repatriate foreign earnings, lest a third and then some disappear.
Now Chicago-based Walgreen’s is contemplating a deal that highlights the absurdity of U.S. corporate taxation. Walgreen’s has been maneuvering to buy Alliance Boots, a Swiss firm of similar profile, and relocate the corporate HQ to Bern, despite virtually all Walgreen’s sales taking place here.
The Left’s cynical response is to see unpatriotic behavior whenever a company balks at coughing up 40 percent.
Treasury Secretary Jack Lew intones that a “new sense of economic patriotism” is needed, and Illinois’ Senator Dick Durbin castigates Walgreen’s, saying customers who are “deeply patriotic” will walk away.
Lew identifies sensible tax reforms as the remedy for inversions—a laughable ploy from an administration so determined to thwart reform that it appointed Montana Democrat Max Baucus Ambassador to China to get him out of the Senate when he started closing in on a bipartisan, pro-growth tax code.
Americans aren’t so stupid as to equate lying down for the tax man with love of country, and Democrats pushing that line succeed mainly in showing how comprehensively they misrepresent what animates the American idea.