'Inversion' and Economic Patriotism as the Last Refuge of Stupid Pundits and Lazy Politicians


Stephen Poff / Foter

Unpatriotic American corporations are fleeing the United States for foreign climes in a suddenly headline-grabbing practice called "inversion." It's desertion, damnit. Or as Fortune's Allan Sloan puts it in breathlessly stupid form, "Bigtime companies are moving their 'headquarters' overseas to dodge billions in taxes … that means the rest of us pay their share."

He continues:

Ah, July! What a great month for those of us who celebrate American exceptionalism. There's the lead-up to the Fourth, countrywide Independence Day celebrations including my town's local Revolutionary War reenactment and fireworks, the enjoyable days of high summer, and, for the fortunate, the prospect of some time at the beach.

Sorry, but this year, July isn't going to work for me. That's because of a new kind of American corporate exceptionalism: companies that have decided to desert our country to avoid paying taxes but expect to keep receiving the full array of benefits that being American confers, and that everyone else is paying for.

Yes, leaving the country–a process that tax techies call inversion–is perfectly legal. A company does this by reincorporating in a place like Ireland, where the corporate tax rate is 12.5%, compared with 35% in the U.S. Inversion also makes it easier to divert what would normally be U.S. earnings to foreign, lower-tax locales. But being legal isn't the same as being right. If a few companies invert, it's irritating but no big deal for our society. But mass inversion is a whole other thing, and that's where we're heading.

It's legal to emigrate? When the fuck did that happen? And you still have access to the old digs' markets? For shame.

Yeah. I was feeling bad about leaving my former fellow New Yorkers holding the bag for that state's mugging-worthy tax take when I split for Arizona. Not. I got out of that abusive relationship, thank you.

I'm not exactly sure what "pay their share" of taxes means, though I hear that particular whine a lot when people and their businesses flee from the U.S. to Singapore, California to Texas, or from Maryland to Pennsylvania. Everybody left behind supposedly has to pick up the remainder of some fixed tab.

But except for extortions of fixed weights of gold and gems imposed by conquerors of antiquity on their prostrate subjects, taxes are rarely set as sums to be divvied among the suffering masses, but rather as percentages of economic activity. If the local powers that be make their digs so unattractive—say, with a corporate tax rate of 35 percent while the competition asks 12.5 percent—there's going to be less economic activity to get a share of.

Not that there would be anything wrong with fleeing a fixed sum.

We see the same phenomenon within the United States, with people migrating from state to state. The migrations appear to be heavily driven by both taxes and respect for personal freedom (politicians can fuck things up in lots of ways, and not all of them involve tax rates).

What's Sloan's solution?

My answer: Fight to fix the tax code, but don't desert the country. And I define "fiduciary duty" as the obligation to produce the best long-term results for shareholders, not "get the stock price up today." Undermining the finances of the federal government by inverting helps undermine our economy. And that's a bad thing, in the long run, for companies that do business in America.

Yeah, well. This country was settled by people who "deserted" some place else because things were better here. If the powers that be can't find it in themselves to keep things better, there's no good reason to not desert again—ludicrous appeals to self-sacrificing patriotism notwithstanding.

NEXT: Not Charged: Cop Who Killed 13 Year Old Because the Kid Had a Pellet Gun

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. This moron is actually arguing that corporate boards have a fiduciary obligation to give financial support to the federal government?

    That may be the stupidest thing I’ve read all week.

    1. Give it time. It’s only Tuesday.

    2. I could only pray that I would somehow end up in a shareholder suit against that type of clown.

    3. “This moron is actually arguing that corporate boards have a fiduciary obligation to give financial support to the federal government?”

      And this moron writes for a publication supposedly aimed at those in business.
      Why, it’s almost as if turd’s disease is contagious!

    4. He beats that later by saying “Undermining the finances of the federal government by inverting helps undermine our economy.”

      1. He, obviously, comes from the realm of those, who think every dollar spent by the FedGov is absolutely essential and must be made up, if someone doesn’t pay their “fair share”.

  2. The U.S. used to be attractive enough to have not even a hint of this problem. In other words, the U.S. government is the problem, not the businesses, who are acting rationally.

    1. the U.S. government is the problem, not the businesses, who are acting rationally.

      Very well said.

    2. +1 rational self interest

    3. not the businesses, who are acting rationally.

      And not only rationally, but as any rational human being would expect. The fucktard progressives who act like emigration is an outrage are, unwittingly or not, regurgitating the fourth pillar of communism.

  3. This line of thinking (Sloan’s) betrays a more fundamental belief: that government needs come first. This is the big divide in America. It’s not really Dem-GOP or even Left-Right, except in broad terms. It comes down to who you think is owed the payoff of your own labor (or your property’s labor, in the case of investments). Statists use nebulous terms like “social contract” to mask it, but any way you slice it, it amounts to believing govt’s needs are more important than the needs of those who actually earn the money.

    1. This is pretty much a perfect summary. The ideological divide is between those who believe we have an assumed responsibility to support a government, even when it’s against our best interests and those who don’t. It fundamentally comes down to the question of ‘who owns you/your labour’ and their response is ‘the government does’.

    2. We are not the government, and the government is not us. Just getting back to this fundamental principle, which was for a long while axiomatic for many Americans, would solve many, many problems.

      1. We are not the government, and the government is not us.

        Yeah, I wish people understood just how primitive that notion is. It’s essentially the tribal model of the state. The notion of the state as a distinct institution and not equatable with society is a couple of millenia old.

    3. it amounts to believing govt’s needs are more important than the needs of those who actually earn the money

      Yeah, well you didn’t build that.

    4. Everything for the state, nothing outside the state, nothing against the state.

      I eagerly await the day when the Progressives attempt to salvage the term Fascism, since they’ve clearly embraced the politics of it.

  4. Of the government; by the government; for the government.

    1. Everything for the State, nothing outside the State, nothing against the State.

      1. From each according to his ability…

  5. Tell us how you really feel Sloan. He probably would have no problem “banning” inversion. Someone like him would watch admirably as the arm of the state beats up these evil corporations and forces them to stay, or even takes them over. Yet, he himself wouldn’t have the balls to go extort someone. Fortunately for many, their right to self defense is still “allowed” in some states, so Mr. Sloan would face consequences for his attempt at robing someone.

    It’s a wonder folks who live under this current system wish to flee higher rates of extortion, and take their business to a place who’s extortion rate is far lower. This is yet another reason voting and gov’t are nonsensical. Folks like Sloan, whom despise freedom and would rather be some politicians slave, far outnumber folks who wish all to be free.

    1. capital controls arguments will always fail the smell test.

  6. What’s the personal tax rate in Ireland? Favorable? (Or do they write it as favourable? Might be a deal breaker.)

    1. Corporate tax rate on trading income is great at 12.5%, but the rest is not favorable at all in Ireland:…..of_Ireland

      There are better countries in Europe (not necessarily part of the EU) for individuals. Andorra, Monaco, San Marino, Switzerland, Liechtenstein, Czech Rep, Estonia, Bulgaria and Romania all sound pretty good. Among the later group, one thing Eastern Europe shares in common are low flat taxes.

      1. Yea, interesting what a half-century of Communism will enlighten a people to.

        1. As someone from a former Communist country I can dispute that. A leftist constitutional majority has just been elected to the National Assembly in our country. Even the socialist party (United Left – which is essentially communist except in name and who also vowed to freeze all privatization efforts) scored six seats. The classical liberal Civic List got only 0,68% (and required 4%). It’s sad how delusional people can be.

  7. It’s ludicrously un-American to emigrate because of this country’s ass-backwards tax code. But when actors and progs declare “We’re going to CANADA!” when Bush was elected for a second term? Well now, that’s true patriotism.

    1. “But when actors and progs declare “We’re going to CANADA!” when Bush was elected for a second term? Well now, that’s true patriotism.”

      And don’t we wish they had! I’d buy ’em a one-way ticket.

    2. Or when they just go to BC to make movies because California’s too expensive. I don’t hear anyone on the left screaming for a boycott of those films/shows.

  8. It’s bad that businesses are moving to where it is cheaper to operate. cool.

    By the author’s arguments, should everyone live in downtown Manhattan due to “duty” or some weird notion, instead of seeking a less costly place to live? How about schools? Should all people pay through the nose for expensive private schools and not take the alternative (cheaper charters or even, [I can’t believe I’m suggesting this] public schools)? Cars? Should everyone just buy a Maserati and not go for the more affordable Hyundai because, well, Godvernment might not get a big enough cut?

    The problem is taxes are too high here, not that the dastardly corporashunsss are disloyal to Uncle Sam, bald eagles and apple pie.

    This guy is literally staring the problem in the face and blaming something else. Mental gymnastics.

  9. We desperately need to pass a law requiring other states and countries to return these fugitive corporations back to their rightful owners.

    Fortunately the Democrats have a draft written up already.

    1. Its why they lose their marbles when SCOTUS rules that corporations have rights. The left want all corporate rights wiped out so corporations can operate under the whims of the government.

      1. Render unto Ceasar…

  10. So this guy is writing this article for a magazine called “Fortune”? Shouldn’t it be in “Shared Misery” or “Yours, Mine and Ours” instead?

  11. By this fellow’s logic women who leave abusive husbands are no good ‘deserters.’ Don’t quit these guys ladies, work to make them reform!

  12. “The problem is taxes are too high here”

    The problem is taxation is theft. It is extortion, and forces individuals into slavery. Someone’s desire for “minimal government” or even a large one still advocates for, and would force others to be slaves to the state. It completely violates the NAP, and is antithetical to freedom & liberty.

    The minarchists and those for limited government miss that, and use the excuse of maintaining a “limited govt” for defense, courts, etc.. This is impossible, and the result of the experiment from 1776 was a failure. If limited govt was possible, it would have stayed the same from the constitution forward. Like all govts, they grow and consume till there is nothing left. Socialism is an abject failure, and to make it seem magically efficient and the best way to provide for ROaDzzz and DeFENCE is ludicrous.

    This is why the perpetual problem of govt exists. Folks keep trying to reinvent it, “if only we had more money, better people, wait for it………… a CONSTITUTION!!!!!, blah blah blah” would it work.. If repeating the same thing over and over again expecting different results is insanity, then the logical conclusion of govt is insanity.

    1. And some minarchists believe in the need for a minimal government footprint, and are willing to accept the trade offs of taxes and restrictions on freedom that accompany it.

      We tried anarchy, and it worked great until the other tribe built better weapons. Then they took our shit and raped our women.

      1. Aye. This. If anarchy were possible, I would support it. Since it’s not, I support the next best thing: minarchy. There will always be a gang of thugs who claim a monopoly on the use of force.

        1. “Not stealing is a good idea but because stopping stealing is impossible I support the next best thing: a centralized authority that stops stealing by stealing”

          I hope I am not forced to be in YOUR minarchy.

          1. “There will always be a gang of thugs who claim a monopoly on the use of force.”

            Ah, the warlord fallacy. Well, an armed community is a deterrence.

            1. Not a fallacy, it’s a fact of reality that is inconvenient for your transparently rationalistic theory.

              1. Sorry, but just like you hate it when liberals say the market won’t provide healthcare, so they ram it down your throat you are doing the same with govt, by advocating it be rammed down everyone else’s throats because freedom is not possible.

                You wanting to have a mini state is still advocating mini slavery. Come and rob me, or try to enslave me. Oh wait, that violates the NAP……. But govt itself, no matter the size does the same thing.

                If one says they support the NAP and free markets, then they can not support a violent state. Being a minarchist and yelling freedom, is doing the same thing the “conservatives” do when they run around yelling freedom and liberty while waving their don’t tread on me flags. They support their own form of theft, force, etc which is the state… there is no way they can logically conclude they support any of the aforementioned.

                Libertarian Anarchy is not impossible. Don’t know why you’re afraid of freedom, but if folks like me could volunteer to fight, we would do so to keep you free too. Why you want a mini violent state to enslave me is nonsensical.???……???

          2. You hot the nail on the head.

            To the others. Socialism / govt doesn’t become magically delicious like effing lucky charms. These ideas require violence. If you aren’t coming to my house to steal, because you better kill me, then how in the hell are you to support a “little” govt to do so on your behalf?

  13. What part of “Confiscation of the property of all emigrants” don’t you understand?

    It’s the 4th plank of the Communist Manifesto.

    Of course progressives support it.

  14. Ugh, and now I have lost minutes of my life trolling the comments to this article.

    Some of these people are so lacking in critical thinking skills… “I’M A CAPITALIST BUT IT MAKES ME SO MAD THAT CORPORASHUNS ARENT PAYING THEIR FAIR SHARE!!!!@!@$!111”

    I’m going to need a trigger warning in the future when you post idiotic articles about corporate taxes. Thanks.

  15. Yes, leaving the country?a process that tax techies call inversion?is perfectly legal. A company does this by reincorporating in a place like Ireland, where the corporate tax rate is 12.5%, compared with 35% in the U.S.

    I thought there was no such thing as incentives . . .

  16. Pull no punches, 2chili.

    Left, right, left, right.

  17. Sloan writes, “Even though I understand inversion intellectually, I have trouble dealing with it emotionally. Maybe it’s because of my background: I’m the grandson of immigrants, and I’m profoundly grateful that this country took my family in. Watching companies walk out just to cut their taxes turns my stomach.”

    Um, just why did his parents emigrate from somewhere else. Could it be that the government of their original country was so onerous as to give them reason to leave? Could that same thought occur to these businesses?

    1. sorry, grandparents.

  18. So the author literally gives two ” f***s” about this topic but doesn’t do so figuratively when it comes reaching a general audience with these good ideas.

  19. Note that it’s not entirely legal to undergo inversion.

    The Tax code puts various roadblocks in the way precisely because of this issue. The Kennedy administration wanted ?367 to block what it saw as moving property through foreign companies to manipulate taxes. And ?7874 will in some cases treat the inverted entity as subject to US taxation as if it were still a domestic taxpayer.

  20. Perhaps someone should tell that douche Allen Sloan that if the US doesn’t want mass inversion, they should offer a competitive corporate income tax rate…

    Corporations do not exist for the paying of taxes into the government coffers or the provision of healthcare to their employees, you entitled prick.

  21. I can solve this turd’s problem for him: Change the US Corporate Tax Rate to 10%. Done. The funny thing is this implication that every shareholder of a corporation is an American. Maybe the corporation was founded in the US, but publicly held corporations have investors from all over the world. Why would you base the decision to choose a headquarters on anything other than maximizing profits with that in mind?

  22. Yes, leaving the country?a process that tax techies call inversion?is perfectly legal. …But being legal isn’t the same as being right.

    Yeah, taxes are the price you pay for the things we all do together. And if you libertarians don’t like it, you can leave!

    Oh, your leaving?!?! You can’t leave! That’s not right! You have to stay!

    Yes, you have to stay, and we’re doing things our way, and if you don’t like it, you can leave!

  23. It’s not the code only. The whole of the federal government is broken. Particularly, no one wants to make decisions, or has the authority to do so.

    Until then, enjoy the ride on the rudderless US of A. AS for me, I’ve got my life boats established. My family and friends have access to my panic room.

    As for the rest of you? Go to Hell.

  24. he’s ignoring the fact that the headquarters still needs to pay land taxes, all the in-country employees still pay income taxes, and all sales in the country pay sales taxes. He’s also ignoring that the companies are then subject to the foreign countries’ laws, which may not be as favorable in certain areas.

    But overall, it’s amazing that the guy doesn’t realize that what this really means is we shouldn’t be making our country so shitty for business in the first place.

Please to post comments

Comments are closed.