Taxes

Moving Your Company Overseas Is So Evil, Jack Lew Would Ban it in the Past!

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Jack Lew
U.S. Government

Treasury Secretary Jack Lew, who can't pass a quarter-sized knothole in a fence without seeing a tax "loophole" through which lucre might pass that the government could otherwise palm, joins his voice to those condemning U.S. corporations who move overseas to reduce their tax burden. In a letter to four members of Congress, he also manages to imply that it's wrong to move yourself overseas to avoid Uncle Sam's sticky fingers. In fact, he's so repelled by the practice of shopping for lower tax rates that he wants the practice stopped in the past.

The letter, dated yesterday and addressed to Representatives Dave Camp (R-Mich.) and Sander Levin (D-Mich.), of the House Ways and Means Committee, and Senators Ron Wyden (D-Ore.) and Orrin Hatch (R-Utah) of the Senate Committee on Finance, complained about the practice of "inversion," whereby companies move their headquarters to low-tax countries while continuing to operate in to U.S.

In recent months, there have been reports of a number of corporate inversion transactions designed to change the tax domicile of a U.S.-based multinational firm with minimal change in its business operations. These transactions involve the purchase of a foreign corporation (generally with a much lower corporate tax rate and generous rules for shifting income between countries), the transfer of tax domicile to the foreign firm's country of incorporation, and the shifting of tax liability for the combined firm to the new foreign tax domicile.

Inversion
The Random Hiccup / Foter

Lew whines on, "these firms are attempting to avoid paying taxes here, notwithstanding the benefits they gain from being located in the United States."

Because, apparently, taking their facilities, jobs, technology, and investments with them would be the proper thing to do.

As with every complaint about inversion so far, Lew's letter comes off as a flag-wrapped serving of patriotic mush. Like other non-fans of inversion, he fails to acknowledge that, maybe, the United States just isn't that competitive in some areas (such as corporate taxes) and should try something smarter than chanting "USA!"

Incidentally, according to rankings released last year by the consulting firm PricewaterhouseCoopers, the U.S. ranks 64 out of 189 for ease of paying business taxes. This country also has a total tax rate that's above average, and barely seems to be trying to compete with other countries that Americans once mocked as overtaxed and overgoverned.

Ease of paying business taxes
PwC

Canada ranks at 8, the U.K. at 14, and Australia at 44—with burdensome bureaucracy as big a concern as the government's take. Ireland, where several U.S. firms recently relocated their headquarters, comes in at 6.

Maybe there's room to quibble with those rankings, but the idea that companies can't and shouldn't hunt for environments that don't strangle them in red tape and suck them dry is ludicrous.

In fact, Lew seems to resent anybody going hunting for friendlier environs. "We should prevent companies from effectively renouncing their citizenship to get out of paying taxes," he says. Ah. Shades of efforts to penalize individuals for seeking lower-tax homes elsewhere. We're all in this together, or else.

And what's Lew's solution?

Senators Ron Wyden and Carl Levin and Congressmen Sander Levin and Chris Van Hollen have supported this idea in Congress and have put companies on notice that any transaction that takes place after early May 2014 will not have the desired effect of lowering future U.S. tax liabilities. Congress should enact legislation immediately—and make it retroactive to May 2014—to shut down this abuse of our tax system.

What's that Latin phrase? Ex post…something. It will come to me.

Maybe we could just improve the tax environment in this country so that people and businesses want to stay. And, to his credit, Lew does recommend lowering the corporate tax rate, and simplifying the tax system, though he also wants to "broaden" the tax base and, of course, close "loopholes."

Hey, you can't have a little tax reform without vilifying, threatening, and flag-waving at the folks asking for some relief.

NEXT: Oh Noes! Rand Paul is Getting Popular in Silicon Valley! Plus: Get Rebooted in SF with Nick Gillespie!

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  1. Who else read that as “Lack Jew”? Be honest.

    1. Your 10mm talk got into my head. I’m looking at a G29 now.

      I want a hand cannon, dammit!!!

      1. The 10mm is a potent round.

      2. Isn’t it enticing? I’ve always loved my dad’s S&W 29. It’s high time I had my own impractically overpowered pistol.

        1. Just go buy a Desert Eagle .50 and become the idiot you so want to be.

          1. Can Warty concealed carry a Desert Eagle? I sure hope so…

            1. I played with one once. Given a baggy enough shirt, I think I could pull it off.

              1. Played with a Warty? That there might be multiple ones is scary, and I don’t mean inside his head. Or pants.

          2. Good thinking. Maybe I’ll get a gold-plated one and then I can be Saddam Hussein.

          3. The ultimate in “Take that! Fucker!” technology…

            1. Without that gun in it the next Mad Max movie will be a failure on every level.

              1. An unmanageable, unaffordable, and utterly pointless pistol for crafted specifically for those of discerning tastes and disposable income, cheapened and defiled by common vagrants in a Hollywood picture? I think not, Good day sir!

                1. Sooo…

                  Nothing like this gun?

                  navdi.files.wordpress.com/2010/08/humungus2.jpeg

        2. 10mm isn’t that overpowered. But if you’re looking at it, factor in learning to reload because 10mm ammo is expensive and difficult to find.

          1. It’s not overpoweres, it’s rightpowered, compared to .40 Short&Weak;… 😀

            -perlhaqr, proud 10mm bigot

      3. Do you have small hands? I ask, because I have a scar on the back of my right hand from riding my grip up too far on a G29 and having the slide run across the web between my thumb and index finger.

      4. They are fun.

    2. Lackluster approach to anti-Semitism is duly noted.

      1. Lackluster?!?

        1. LACKluster!

          1. That joke could have used some more time in the oven.

            1. To the showers with that shit!

              1. I came for the cosmotarianism, but I stay for the genocide humor.

                1. I learned it in camp…

                  1. Where you learned to concentrate?

  2. OT:

    I am sure this has been posted here before, but here is video of Buzz Aldrin punching a moon landing hoaxer in the face.
    http://www.gizmodo.co.uk/2014/…..-the-face/

    1. Most convincing rebuttal to the hoaxers yet.

  3. In proggo-world, John Locke wrote that the people exist for the State. How dare they show defiance!

    1. Beat me to it.

      He is just a mouthpiece for Mr. YouDidntBuildThat.

  4. You know who else wished he could have gone back to the past and done things differently…

    1. Ted Kennedy?

      1. I don’t think he would, actually.

    2. Hillary Clinton’s mom and dad?

      1. Bill Clinton?

    3. George Bailey?

    4. Col. Custer?

    5. Phil Connors?

    6. Your mom?

    7. Buck Rogers?

    8. John E. Fuckerfaster!

  5. But … but … America’s corporations are undertaxed as it is, and tax incentives are a Randroid myth.

  6. Minnesota Proletariat Radio had a piece on this week talking to some Fortune tard about this. I heard almost nothing but the echo chamber talking points:

    “Medtronic NEEDS roads and the FDA for its products”
    “It’s not right for these companies to just leave!”
    “It’s a moral issue!”

    And no discussion about the fact that the US is one of the few countries that lacks a territorial taxation system or the fact that even without inversions these companies can always leave (and will). We’re always just one law away from perfection. Just one more…

    1. We’re always just one law away from perfection. Just one more

      “All currently existing federal agencies, regulations, laws and taxes are hereby revoked.”

      1. “I have diplomatic immunity” BLAM. Diplomatic immunity revoked.

    2. No, that’s just the way they couch their lies. They do not, in any way, believe in law. They believe in force. Often the law is all the force they need, so they’re ok with it. But when people find “loopholes”, you see the mask come off and they dispense with “law”.

      Force is all they know.

      1. Very true. Take the tax code. If you don’t follow the code, they nail you. Even if it is hopelessly complex and filled with crony based exceptions, you have to follow it. But IF you happen to juxtapose two or three pieces of the code and produce a favorable tax benefit for yourself (obviously outside of the intent of hauling off your money) you aren’t in “the spirit” of the “law” and you are put back into the position they want you in, sometimes taking only the juxtaposition that is WORST for you. If anyone has any illusion that we aren’t, and haven’t been, in a fascist system – and the state apparatus that is necessary to execute it – this should be a wake up call. The extortionists, when you beat them at their own game, invoke some romantic notion of being “in the spirit” of belonging to The Collective. Any notion that you actually own your property is an illusion.

        1. In Canada if it can be determined by CRA, our IRS equivalent, that you made a business decision strictly to save taxes, and it had no impact on profitability they can declare ‘tax avoidance’. You can’t take the rules and use them to your own benefit. Tax avoidance is not tax evasion, which is criminal. Tax avoidance gets you a penalty, interest, and you have to pay the back taxes ‘owed’.

          1. We have something similar in the U.S. It’s called the “economic substance” doctrine. It has now been codified in Internal Revenue Code ? 7701(o).

          2. how about just having a flat tax, then there’s nothing to avid, everyone pays the same, regardless of their business decisions

            1. I agree with you, though every time it’s proposed you will get the typical progressive response, “But you will be taxing poor people !!!”

    3. Also missing in NPR land is the fiduciary duty of the managers of these companies to avoid paying unnecessary expenses such as arbitrarily high taxes. If the government doesn’t like the law, change it. (And then watch companies disincorporate completely to re-start where tax laws are sane.)

    4. It is a moral issue. Just not in the way they think it is.

      1. No they’re right.
        *These companies have a moral obligation to piss the wealth of their investors into government rathole without complaint.
        *They have a moral duty to accept ever-diminishing profits without a second thought about the political environment.
        *The investors for their part, have a moral duty to pass their savings on to losing noncompetitive ventures. AND THEN regardless of profitability they need to continue to piss their money away for the good of “America”. Then we’ll have a prosperous society.

        That’s moral economics. Fact.

        1. I nearly forget to mention that companies have a duty stay located in the US no matter what. The collective owns their capital, the collective is the only reason they have capital. The collective will not be denied their due. Even their labor is owned by the collective, they’re not allowed to not work here after all. Slavery is for the greater good!

    5. …”some Fortune tard”…

      That rag had a rep worth something at one time.

      1. So did the economist. What happened?

        1. For thirty years every economist and journalist and writer coming out of the university system has been inculcated with socialist thinking. They are now running even the biz mags.

  7. A tax inversion removes overseas profits the US tax calculation.

    In other words, companies that invert are asking only to be taxed on their profits earned within the US.

    But I wouldn’t expect Lew to be honest.

    1. Most of Europe has a territorial system of taxation. Why don’t I hear the Leftards wanting to emulate that?

      1. Tax is a duty, and moral obligation. Profit is theft.

    2. There is a way of beating the system.

      Own two companies, one in Viet Name for example, and one in the US. Make the product in Viet Nam and sell it to the US company at higher than market prices.

      So, it costs $1 to make a widget in VN, and it sells in the US for $10 wholesale. Sell it to the US ‘subsidiary’ for $9, leaving just enough in it to cover admin in the US. The US subsidiary makes nothing, the Viet Nam company makes $8 and is barely taxed.

      Fair enough, but if a company in the US can buy that widget from other exporters from Viet Nam and they can buy it for $4, then technically their pricing is strictly to avoid taxes in the US.

      I can see an argument against that in that case.

      1. Possibly – but who gets to decide what the cost should be? Is the IRS really competent enough to know what different divisions within a larger corporate context should and should not charge other divisions?

        Not to mention the fact that the product will be taxed multiple times anyway – import taxes, sales taxes, etc, etc, etc…

        But sure – because it might be wrong, might as well have the same idiots who openly attacked Tea Party groups deciding whether a given business should be punished based upon what any one division charges another.

        I’m sure that won’t be abused at all.

  8. from the*

  9. Maybe Jack Lew would like to hold the first-born child of every CEO in America hostage, to ensure their fealty and prompt payment of taxes.

    1. Oh, they already have their fealty, but the CEOs have a higher duty to pay the minimum taxes allowable under the law. Lew is just whining.

  10. companies that invert are asking only to be taxed on their profits earned within the US.

    That’s just crazy.

  11. Hmm, I didn’t realize companies and individuals owe fealty to the land of their births.

    And I thought progressives wanted to prevent a return to feudalism.

    1. They strike me as hoping for a business version of adscripti glebae.

      1. That’s exactly what they’re aiming for.

        1. …a sort of financial Berlin Wall.

    2. When did they say they want to prevent a return to feudalism? They accused libertarians of being feudalists, which is as much as a tacit admission that they are neo-feudalists, given their tendency for projection.

  12. It’s amazing how to these fucks, following the law the way it’s written is still bad. This is why you have to understand that we do not live under the rule of law. They don’t give a fuck about the law if it doesn’t work out the way they want it to. They want what they want, and if a law gets it for them, great. If it doesn’t, they still want what’s yours and they will find a way to get it.

    The rule of law is in fact a trap. You follow the law because you believe that that’s how things work. Then they come along, don’t give a shit, and take your stuff anyway.

    1. They don’t care about the rule of law because they don’t care about anything other than the material world and results in it. They don’t care about your abstract concepts like the rule of law. If following the rule of law causes results they don’t like, then you don’t follow the rule of law. It is the results that matter not all of these made up principles people like you and me are always talking about.

      Worse than that, they have gotten so stupid and delusional, they don’t even understand how or why things happen in the real world.

    2. Repeat after me: It’s the money-grubbing liberals who are really the greedy ones all along, despite what they claim.

      1. Well, that would be pure projection from them. As always.

      2. “Politicians never accuse you of ‘greed’ for wanting other people’s money — only for wanting to keep your own money.” – Joseph Sobran

        1. best stylist the right has ever had…no joke.

      3. Well, they do have the most millionaires in Congress. Funny, right?

        1. It’s OK to be rich if your politics are correct.

    3. An excellent thesis on the subject of Law.

      http://faculty.msb.edu/hasnasj…..ythWeb.htm

  13. There’s no glory in a loophole

    TooChilly, you are the best.

    1. There’s no loop in a gloryhole

        1. Vote Refresh, early.. and often…

    2. There’s no glory in a Lew pole?

      1. That depends what size shoe said Lew wears.

      2. Lew pole would never admit to having had any glory.

  14. The rest of the world is improving itself enough that there is a choice. You can say no and bail. This gives me tremendous hope. Competition means you can’t say no to more freedom.

    1. All the more reason progressives want to elevate international law above the U.S. Constitution.

      No more escaping to a low-tax country. Maybe they could try outer space.

  15. Communism was a world movement because the communists understood that if the whole world wasn’t communist, the system would fail because the capitalist exploiters would move to non communist countries and undermine communism. And they were right as far as it goes. Even if communism were not insane, it couldn’t have ever worked in the long run unless the entire world adopted it.

    What amazes me about modern Progs, who are the profoundly retarded grand children of the old Marxists, is how they cannot understand the logical consequences of their own views. If you raise taxes and make evil businessmen and capitalists pay their fair share, said evil people will just move somewhere that doesn’t do that. Even the Marxists understood that. Yet, these people act surprised when this happens. The Marxist solution, since they were not able to spread communism across the entire world, was the build a wall and shoot anyone who tried to go over it. These assholes better start building a wall or find a new ideology.

    1. Well, plenty of progressive legal scholars love international law because it solves the “problem.”

      The obstacle they face, though, is there’s no realistic chance that most countries would essentially abdicate their sovereignty for a world government. It’s why the U.N is really not at all a true “world government.”

    2. Intentions trump results.

    3. These assholes better start building a wall or find a new ideology.

      In fairness Republicans are building one along our southern boarder for them.

      1. It was under Bush W that we now have to get a passport to travel to fucking Canada and Mexico.

      2. They will have to turn the guns the other way for it to work.

    4. They don’t understand that because they are the profoundly retarded grandchildren of the Progs, not the Marxists. Take a fascist, then convince that person that racism and nationalism is very bad, otherwise leaving their beliefs unchanged, then turn that poor confused bastard loose on the world. There is your prog.

      1. The progs were the retarded step children of Marx.

        1. they’re secular calvinists. Leftism is a post millenial christian movement with god and jesus taken out.

    5. John|7.16.14 @ 2:41PM|#
      “Communism was a world movement because the communists understood that if the whole world wasn’t communist, the system would fail because the capitalist exploiters would move to non communist countries and undermine communism.”

      Yes.
      So long as someone, somewhere offered an alternative (and you can tell from the current US it didn’t have to be wonderful), communism would fail.

  16. Clearly, the only solution is global government!

  17. 46.3% tax rate

    This can’t be true. Honest and noble Shrike who would never tell a lie has told us Obama lowered the tax rate to 25%.

    1. If taxes are lowered, it’s because of Obama. If taxes are raised, it’s because of Christfag GOP aborto-freaks.

      1. +1 ratfucker

  18. Lew and his ilk would want a proscription list pinned to the doors of Congress, where the proscribed companies are listed….their executives could be killed under cover of law, their assets forfeited to the State.

    1. Holder’s drafting the legal cover for this, as we post..

      1. “Make sure you pin those CEO heads and hands to the rostra!”

        /Holder

      2. Cover? He don’t need no stinkin’ cover. He’s got the press.

  19. They could fix this travesty by eliminating the corporate tax altogether. It’s a pass thru tax anyways.

    1. Eliminate the corporate tax and have a federal sales tax. Anything sold here gets taxed at the same rate, wherever it was made.

      People would go insane. But, it would make local companies more competitive. Hugely more competitive.

      People don’t get that all costs of a corporation, regardless of whether it is real costs or taxes, are paid for the end consumer.

  20. Ex post facto are specifically outlawed by Article 1 of the Constitution, right after Bills of Attainder.

    1. That’s unfortunately been interpreted not to apply to lots of laws, especially outside the criminal context. They probably could constitutionally get away with it, though perhaps not politically.

      zum Beispiel:
      http://fas.org/sgp/crs/misc/R42791.pdf

      I suppose it makes sense in a horrible way. If a special inversion tax is already vindictive thievery and pompous megalomania, why couldn’t it also be unfair and unreasonable?

    2. What’s that Latin phrase? Ex post…something. It will come to me.

      Taxes are one notorious exception, viz United States v. Carlton.

      1. Taxes are one notorious exception, viz United States v. Carlton.

        The failure of the court to enforce Article 1 doesn’t change what it says. Ex post facto “laws” are not laws at all, but usurpations.

        -jcr

    3. Clinton made his tax increases “ex post facto” by about 5 or 6 months.

      No one, except those being directly taxed, complained.

      Many of those being “indirectly” taxed didn’t realized it and though it was a good idea to tax those others.

      It held up business investment by about a year while it was being settled upon. One year of no business investment because of unsettled government policy.

  21. Yeah, it’s the same damn story:

    We’re taxing you, and if you don’t like being in our society, you can leave!

    What, you’re leaving? You can’t leave. That’s so evil! You have to stay, or we’re taking your stuff!

    Yeah, you have to stay. But, if you don’t like it, you can leave. After you give us all your money. That’s fair, because you can leave.

  22. Thanks to government taxes, labor union greed, the environmental fanatics, and the anal types in our corporations, our manufacturing base was shipped overseas (mostly to China), leaving millions of Americans without jobs in that important area. In a way, the failure of these ‘institutions” to cooperate with each other might be called a form of treason.

    1. In a way, the failure of these ‘institutions” to cooperate with each other might be called a form of treason.

      Because failure to cooperate in a manner deemed appropriate to On The Road to Mandalay equals betraying country.

      Perhaps, next time a union goes on strike, we should just round up the strikers, convict them, and execute them?

      Try not to go completely high-drama over-the-top nuts.

      1. Brian,

        As usual you have taken my remarks out of context. Of course I expected this from you, since you obviously don’t agree with my opinions anyway. That’s fine. Not a problem. However, I NEVER said that people should be executed or anything close to that. If the word treason offends you so much, let’s say that the failure for those institutions I mentioned to cooperate amounts to a betrayal of the American people.

        I’m really trying to be decent about this, but if you still insist on putting words in my mouth, then there is not a whole lot to say.

        So, did these institutions I speak of fail to cooperate or not? Instead of blasting me by accusing me of a meaning I never said, why don’t you offer something different in you disagreement?

        1. Well, if the union agrees to a contract with the corporate owners, then they did cooperate. Unless, of course, it ended in a strike or a shut down of a company. In which case, they didn’t (I guess?).

          Anyway, the whole point of government is forcing people to do things they don’t want to do: pay taxes, regulate the environment, etc. So, what’s cooperation have to do with that?

          If you want to drastically lower taxes, fine by me.

          Betrayal is the breaking or violation of a presumptive contract, trust, or confidence that produces moral and psychological conflict within a relationship amongst individuals, between organizations or between individuals and organizations.

          Exactly how cooperative is everyone supposed to be before it gets labelled as betrayal?

    2. On The Road To Mandalay|7.16.14 @ 6:14PM|#

      “Thanks to government taxes, labor union greed, the environmental fanatics, and the anal types in our corporations, our manufacturing base was shipped overseas (mostly to China), leaving millions of Americans without jobs in that important area. In a way, the failure of these ‘institutions” to cooperate with each other might be called a form of treason.”

      Who should be arrested for it ?

      1. OneOut,

        Why don’t you tell me.

    3. …and the anal types in our corporations…

      Do what now? I get taxes, unions, etc., but what are you talking about here?

      At any rate, it’s a bit irrelevant. The “death” of American manufacturing is only a tragedy to the extent that those jobs aren’t replaced by others, which they have.

      If you’re bemoaning the fact that we no longer “make anything” in this country, I’d say first that that isn’t strictly true. We’re seeing something of a resurgence of manufacturing jobs in right-to-work states, especially in the south. A lot of Lou Dobbs types want to see something like a return to the good old days of Detroit autoworkers making upper-middle-class money for being in charge of bolting on the left rocker panel of a Ford Mustang, but they forget that those are essentially unskilled, menial labor jobs. The only reason they were ever desirable is because unions artificially jacked up wages, which, as you point out, also killed those jobs in the long term. People complain that those “good” jobs have been replaced by low-paying service jobs, but that’s the realistic equivalent in terms of education (minimal to none) and skill.

      Bottom line: we don’t want those jobs back.

      1. Why don’t we want those jobs back?

        1. Because paying artificially inflated wages to unskilled laborers simply because they’ve drilled out the hole in the door where the lock goes for twenty years is not the best allocation of resources for anyone involved.

          Anyone can perform unskilled labor because it only requires the ability to repeatedly follow simple instructions. For some people, that’s the best they can hope for. Most people, however, are capable of learning skills or acquiring specialized knowledge. Those people can command higher wages because they’re simply worth more. They also have increased job security, because those jobs tend to stay relevant and experience in those jobs is more valuable.

          If all I know how to do is operate a particular machine in a manufacturing plant, I can and will be replaced by a robot, or that particular product will be phased out. My time at that particular station has not left me with any knowledge or skills that are worth anything in any other context, so when I lose that job I start from square one. How different would my position be if I were a welder, or a bricklayer, or a nurse, or a software engineer?

          Have you ever heard anyone upset about those valuable American technical support jobs that have been outsourced? Is Lou Dobbs fretting over the thousands of Americans who no longer answer phones and walk through a script with angry customers for $15/hour?

          1. Excellent – I wish this site had a ‘rec’ button.

  23. This is pure Chucky Moobz style brilliance. We can’t stop anyone from coming into the country, but damnit, we can stop everyone from leaving! Fucking idiots.

  24. Of course, it never occurs to the apparatchik that maybe fixing US tax policy so that they don’t drive businesses overseas is even a possibility.

    -jcr

  25. So I’m curious — if a country does move out of the US, how would the US collect taxes on those foreign assets without opening up the possibility of a foreign nation taxing assets within the US?

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