Constitution

Corporate Inversions: The Latest Target of Unilateral Executive Action

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New York Business Journal

Sometimes, pens and phones are mightier than swords. Having put aside its legal qualms, the Obama administration will move ahead with plans to take unilateral regulatory action against corporate inversions, seeking to make them more expensive and more difficult to finagle.

The president explained his decision yesterday in a statement loaded with enough buzzwords to make even a climate change activist blush:

We've recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill, and I'm glad that [Treasury] Secretary [Jack] Lew is exploring additional actions to help reverse this trend.

The "loophole" allows companies to take shelter overseas from America's byzantine corporate tax structure. Under the current system, American-domiciled companies are not only taxed at the highest rate in the world, they also owe Uncle Sam taxes on income earned outside U.S. territory. American companies can avoid these taxes by merging—"inverting"—with foreign companies.

But the economics of his proposed solution aside, the proposal is just the latest in a long Obama administration tradition of taking unilateral action, often with the briefest perfunctory nod at Congress: Congress duly passed Obamacare, but the president's administration has made a habit of selectively enforcing provisions and unilaterally changing parts of the law. The president dubiously claimed he didn't need congressional approval for military action in Libya. Obama is also hoping to bypass Senate approval for a new international climate change accord.

If Libya wasn't proof enough of a reversal of Obama's 2007 position on executive power, he now claims he doesn't need approval to attack ISIS in Syria and Iraq. This despite the patent illegality of the whole affair—John Yoo notwithstanding. The president has instead been content with paying lip-service to congressional approval for military action in the Middle East, saying that "he would welcome congressional action that demonstrates a unified front," but denying he actually needs it.

And so too with his executive action cracking down on corporate inversions: "Both Lew and Obama have said that they would prefer to see Congress take action to prevent inversions, but lawmakers have been deadlocked." 

President Obama has claimed that "we are strongest as a nation when the president and Congress work together." Yet it is becoming increasingly clear that Obama thinks the nation strongest when Congress agrees to whatever he wants. And should there be disagreement, well, he'll forge ahead anyway.

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  1. Why should accountable politicians have to face voters when the executive has all these unaccountable regulatory agencies with the power to create rules with the force of law?

    1. Well there are checks and balances still.

  2. This is pure class envy politics and much ado about nothing. Even if you take the inflated value of the government’s tax losses due to inversions, it’s a drop in the bucket compared to the budget. $20 billion dollars over ten years is nothing, it’s just enough to operate the government for 5 hours each year.

    1. If they closed all the “loopholes” they talk about so much, they might get enough money to operate the government for double digit hours per year. Progress!

    2. “This is pure class envy politics, just before the November elections.”

      Just thought I’d clarify that sentence a little bit.

  3. Yet it is becoming increasingly clear that Obama thinks the nation strongest when Congress agrees to whatever he wants. And should there be disagreement, well, he’ll forge ahead anyway.

    I have it on good authority from many knowledgeable sources that this is actually the fault of ratfucking obstrublicans.

  4. We are really drifting into fucked up territory. I wonder if he’ll go two for two and write some kind of ex post facto enforcement into provisions into his imperial decree?

    1. Why not? Who’s gonna stop him?

      1. SCOTUS?

        1. HAHAHAHAHAHAHA!!!!!!!

        2. They have made their decision, now let them enforce it.

          /AJ

  5. I would love to see business refuse to comply with his orders and tell him to fuck off because he doesn’t have the authority under the constitution. I’ve tried not to hate President Obama but damn if he isn’t persistent.

    1. It won’t happen. They are better off paying the extra taxes than risking huge penalties, sanctions, etc. Hell the legal fees might be just as high as the taxes. By just going along, they don’t risk a suit from shareholders claiming a breach of fiduciary duty.

      1. That is what is so frustrating about government, you can’t win. Even if you go to court and win, your legal fees are higher than paying the fines and you have to pay the salaries of the jerks who tried to rob you anyways through your taxes and court cost.

        1. Yes, but the government also has to pay its attorneys.

          So, there’s that.

          1. There is that. Too bad I can’t print my own money to pay my attorneys.

            1. Don’t you have any neighbors you can rob?

          2. Where does govt get the money to pay attorneys again?

        2. And as has been amply demonstrated by the fines the government was threatening to inflict on tech companies objecting to being co-opted the stakes can get ruinous from jump. It’s like playing texas hold ’em against a guy that gets awarded all your chips +1 after each hand. If he can keep putting you all in no matter how many times you beat him you realize the only solution is not to play.

          1. the only solution is not to play

            Winner! Just don’t bother starting a business, or at least don’t start one here. Imigrate to the Isle of Man or someplace else with no corporate income tax first, then start your business.

            1. This is what will happen. Capital follows the path of greatest return. The US government could get away with this crap for decades because the US market is the largest and wealthiest. As long as that is the case it will likely still be able to get away with it, but as that changes…

              1. So what you are saying is that socialism will work until they run out of other people’s money?

      2. Sure it can happen. Look at the religion of scientology. A group of bat shit insane lunatics sued the irs until it cried uncle and gave them religious status.

  6. the old jurisdiction loophole.

  7. Welcome to East Berlin! Build up that wall!

  8. Attn: Rapophiles. Much Coolness.

    1. Finally! Some brothas (and a sista) are standing up to The Man! Word!

  9. You know, for a little while it looked like Obama was fizzling out and phoning it in and maybe we’d get a break from his endless power-grabbing and regulatory/bureaucratic enabling and warmongering. But here we are back again with him and his administration being fucking scum on every front again. It’s like he’s gotten his second wind.

    Two more years of this. Fuck.

    1. With any luck, this is his last big Fuck-You before the mid-terms.

      1. Yeah, I figure this burst of bullshit is for the leadup to the midterms. Then hopefully he’ll really fizzle out for good finally.

        1. If the Republicans don’t take the Senate, be prepared for two more years of ratcheting up the Banana Republic theme as Obama and the Dems take it as a mandate that the people want more of their authoritarian cock.

          1. Considering how weakly the GOP-controlled House has resisted Obama, I don’t have high hopes should they also get the Senate. They just don’t like getting bad press when they block the Anointed One.

          2. How would the Republican’s controlling the Senate (with less than 60 votes) be able to stop him? He’ll just veto any inconvenient legislation that they pass.

            I expect to see a whole lot of headlines of the type: “President Obama’s Veto saves civilization from the GOP barbarians, once again. – NYT”

      2. Don’t count on it. Expect more fuck you’s to come through the regulatory apparatus. That’s were tyrants go when they don’t have the votes.

      3. That’s the opposite of what’s going to happen.

        The ONLY thing that’s holding him back from just doing whatever the fuck he wants via executive order is fear of losing the Senate. Regardless of which way the elections go, we’re going to have 26 months of Obama completely unleashed.

    2. He’s back from vacation.

      1. I wish he’d go back to the golf course. He was making a lot less trouble their.

  10. I see his grasp of taxing authority is just as informed as his understanding of auto liability insurance.

    1. Or just as informed as his grasp of war-making authority.

      1. Or his knowledge of the name of any player on his hometown White Sox. Or the name of the stadium where the White Sox play.

        1. Or the number of states.

          1. Or World War II history.

        2. Or the name of the stadium where the White Sox play.

          It’ll be Obama Park soon enough.

  11. So, now that the Obama admin has moved the U.S. capital markets closer to the left’s juche model of capital isolationism, where do you think foreign capital is going to go in search of better returns?

    I’m asking because I figure after my kids are grown up and I no longer am stuck in the baystate by the divorce agreement, I’d like to move somewhere freer and more prosperous.

      1. Ah, I remember those days when I used to mock Canada for being a socialist hell-hole.

        1. Those were the days. Grandchildren will be told tales of the days when we were better and more free than Canada.

  12. That Congress is deadlocked is a sign that there isn’t enough agreement on if and how to address this (or other) issues. Which is supposed to be enough to prevent action.

    Democratic representative government, how does it work again?

    1. Regrettably your quaint views on checks and balances don’t comport with modern political and popular views of government.

      The congress’ job is to authorize whatever the president wants. If they’re aren’t giving him what he wants, they aren’t doing their job. QED.

      1. The congress’ job is to authorize whatever the president wants. If they’re aren’t giving him what he wants, they aren’t doing their job. QED.

        THIS IS WHAT PROG-TARDS ACTUALLY BELIEVE*.

        *Unless a Teathuglikkkan is elected president, then dissent becomes the highest form of patriotism.

      2. It doesn’t even have to do with checks and balances. It’s just basic democratic principles that progressives and liberals claim to love so much. Congress is the representative body of the people, and if the people’s representatives can’t come to agreement on some issue, then no action should be taken. Obama, like other presidents before him, is actively undermining democracy.

        1. “Congress is the representative body of the people, ”

          They don’t accept that premise because gerrymandering and such

          1. They may say that, but I don’t by it as their true reason. They don’t believe it now because Congress is standing in the way of something they want.

          2. “They don’t accept that premise because gerrymandering and such”

            That’s just a transparent excuse, as evidenced by the fact that Lefties object to gerrymandering when it benefitted Democrats for decades.

            1. Gerrymandering is an exercise at staying in power by marginalizing opposition voters. Both sides do it so quid pro quo.

              Of course, if the representative voters vote out the critter in power – despite the gerrymander – it is still representative.

  13. Capital Controls!
    Slippery slope into the punji pit of a failed state.

  14. When Obama talks about the president and Congress working together what he means is Congress doing whatever the fuck he wants. Afterall, he is the God-King while Congress is populated by mere mortals.

    1. This behavior, incidentally, is typical of people with narcissistic and/or borderline personality disorder.

      In both of those constellations of behavior, the disordered person cannot accept not getting their way, making negotiating with them a frustrating and often futile exercise. One fun aspect of the negotiations is the accusations that you are sabotaging the effort and being unreasonable and trying to control the outcome that accompany them getting anything less than 100% of what they are asking for at that moment.

      Becoming president was about the worst thing that could happen to Obama. Before he became famous and acquired a fortune based on that fame, he was possibly salvageable. But now he isn’t; he will feed his ego with speaking engagements and the residual adulation that comes with his job, but eventually the phone will ring less and less, and his appetite for plaudits will drive him to ever more extremes; by the time he realizes he needs help, it will be likely to late, he will have crossed some huge boundy, his reputation will be in tatters, and the mantle of a discredited ex-president will become the worst sort of prison.

      1. by the time he realizes he needs help, it will be likely to late, he will have crossed some huge boundy, his reputation will be in tatters, and the mantle of a discredited ex-president will become the worst sort of prison.

        HAHAHAHAHAHAHAHAHAHAHAHAHAHA

        Deep breath

        HAHAHAHAHAHAHAHAHAHAHA!!!!!!!!

        Do you honestly believe this guy is ever going to be discredited?

        There will be a fucking monument to him on the Mall before he’s 70.

        1. Oh he will. My guess is that he is going to smack Michelle around or do something similarly awful that will be humiliating once it gets out into the public sphere. I figure he will start doing really dumb things 2 years after getting office, and the public will become aware of it between 3 and 10 years later.

          1. Puh-leez. We’re just now learning that JFK was basically a serial rapist, and we still have most of the population goo-goo eyed over “Camelot”.

            1. YEs, but he died in office.

              Obama, knock on wood, won’t. The media today doesn’t really differentiate between the public and private spheres the way they did back then.

              I’d stake my reputation as an awesome prognosticator on it, a reputation that was hard-won through my prediction made in December of 2007, when everyone else thought Hillary had it in the bag, that Al Gore would be the next president of the U.S.

              1. “Martyrdom” does influence things, I’ll concede that.

              2. Reason’s own editor published this and you think he will be discredited?

                https://reason.com/archives/201…..-libertari

          2. Carter has been doing dumb (and possibly outright treasonous/illegal) things since he left office and he’s still treated with a great deal of respect. The fact that is antics abroad are mostly ignored by the American news media is really a blessing for him, and the same thing will happen to Obama.

            Obama could murder Michelle and it would either be covered up or divorced entirely from the transcendence that was His Presidency.

            Wilson dragged us into a war and imprisoned dissenters. Hero of the Left, claimed by craiginmass to be one of the top 3 US presidents.

            FDR imprisoned 120,000 Americans because of their ethnicity. Another Hero of the Left (perhaps THE Hero of the Left).

            Obama is going to be remembered fondly, and only old cranks who were alive to know what a miserable piece of shit he was will know any different.

        2. “There will be a fucking monument to him on the Mall before he’s 70.”

          What Mall would that be?

          Oh yes, you are probably referring to Obama Mall. Never mind.

        3. There will be a fucking monument to him on the Mall before he’s 70.

          First black President AND first black Chief Justice of the Supreme Court. He’s probably the only President of our lifetime that will end up on money.

          1. And the libertarians and Republicans will end up praising him to the heavens.

      2. I’ve read quite a few people theorize that Obama has narcissistic personality disorder. Of course, they’ve all been racist right wing teafuckers, natch.

        1. theorize that Obama has narcissistic personality disorder.

          A walking definition of it, I say.

          Symptoms of this disorder, as defined by the DSM-IV-TR, include:
          Expects to be recognized as superior and special, without superior accomplishments
          Expects constant attention, admiration and positive reinforcement from others
          Envies others and believes others envy him/her
          Is preoccupied with thoughts and fantasies of great success, enormous attractiveness, power, intelligence
          Lacks the ability to empathize with the feelings or desires of others
          Is arrogant in attitudes and behavior
          Has expectations of special treatment that are unrealistic

          1. That’s practically a job requirement for a presidential candidate,

        2. I’d be surprised if most of Congress and the executive branch didn’t have that disorder, regardless of party. Obama didn’t suddenly adopt this personality on 1/20/2009.

    2. Every company I’ve worked at has sooner or later started yapping about team work, and they don’t appreciate my comments that their understanding of that is a team of oxen with them holding the whip.

      1. The person who talks the loudest about the value of teamwork always does the least work.

        1. …and yet somehow end up getting the most credit.

  15. It’s interesting that when we get a thread about impediments to capital moving freely across borders everyone here is (rightly) united in denouncing it while when we get threads about impediments to people moving freely across borders the comments are usually split about half for, half against. It’s like the caricature that some have of libertarians that they are for free markets and maybe free persons.

    1. This should be fun.

      1. Most people ignore Bo at this point, particularly when he unleashes some SnoConz-baiting non-sequitur. Or, obvious troll is obvious.

        1. Let’s ignore this inconsistency and return to what all the real libertarians here want, supporting conservatism, amirite?

          1. Bo, you and I agree much more than you probably realize.

            You are your own worst enemy. Seriously. In our last gathering here in Boston, your name came up, and I think half the people had you blocked on Reasonable. Not because of what you advocate, but because of how you advocate it, your obliviousness to the unwritten cultural rules that define our behavior here.

            Which is a pity because you aren’t as stupid as you are perceived to be.

            The rule you are violating here, is to bring up a controversial topic that is at best tenuously linked to the subject at hand. Moreover, this controversial topic is one that people have very visceral, strong feeling about. It’s not a deep-dish vs thin-crust level of controversy, but it’s pretty close.

            To make the rule violation more egregious, you are mocking the people who disagree with you and painting them as idiots.

            All you have accomplished here is to harden the hearts of those who disagree with you towards your message. Nothing else. OK, maybe 1% of them might rethink their position, but those guys were low hanging fruit, just waiting for the right argument to change their thinking. Everyone else will likely be less willing to listen to the open-border argument, because the prospect of agreeing with someone like you will just cause them pain.

            1. I think 1% of the commenters here is actually less than one whole person.

                1. Maybe, though it just occurred to me Smack, Mandalay, and joshrendell may not actually be whole people.

              1. Far more read than comment… far more

            2. As a long time (years) lurker and occasional commenter, I immediately thought Bo was pretentious and boring when he arrived. Some said give him a chance, he’s not a troll. I’ve never seen a commenter here receive such direct constructive criticism, and utterly ignore it.

              Frankly, I’d rather read John and sarcasmic arguing over who’s a chubby chaser and who’s a latent homosexual.

      2. I think it’s a fair point to bring up – certainly freely flowing capital will be allocated more appropriately/efficiently and generate the greatest return to benefit the most people. I think you could make the same or at least similar argument vis-a-vis work, but there are subtle, and not so subtle, differences between wealth/concentrated capital and an individual. Certainly most/many would agree that a better immigration system would benefit more people versus the current system.

    2. Shorter Bo: “This place would be so much better without all the SOOOOOCCCCCOOOOOOONNNNNNNNZZZZZZZ!!!1!!!!”

    3. Capital doesn’t vote.

    4. When capital crosses borders, it doesn’t burn cars, carry scabies, commit identity theft, live on EBT, and squeeze out more welfare piglets. Oh yeah, it also doesn’t vote illegally or allow terrorists to hide among it.

  16. A Swiftian question:

    So why aren’t foreign-domiciled corporations also subject to the US tax regime as soon as they do business in the US in any way?

    That’s the real way to level the playing field. Right?

    If it’s unjust for Burger King to merge with Tim Horton’s and get to exclude their foreign income from US taxation, why isn’t it unjust for Tim Horton’s acting alone to get to exclude their worldwide income from US taxation?

    1. Most of the proggie thought-leaders know that if they did that, it would be like dumping a few trillion tons of silt in all the seaports on the coasts, smashing the runways on all the airports, and create an insta-depression.

      They are stupid, but not *that* stupid.

      1. To paraphrase Yoda: “They will be… THEY WILL BE!”

      2. I would not put it past them at all to cut off their collective nose to spite their face.

    2. A prog-relative of mine actually suggested this.

    3. For that matter, why don’t residents of foreign countries who visit the US have to pay taxes on their income?

  17. Food Deserts and the Incredible cost of the inner-city Tomato (the perfect food?)
    He Must Act On This!

  18. The middle class is stuck with the bill? Really? Did you ever get a letter from the IRS telling you that your tax bill is going to be $12.17 higher this year because X number of corporations used tax advantages that Congress put into the Code? Of course not. So I wonder if the Obama administration isn’t conceding that endlessly printing money to cover deficits is a form of taxation and that it is creaming the future middle class.

    1. Not taking is giving and not giving is taking.

      When the government takes less from some big corporation, then it’s giving money to it. That money has to come from somewhere. Somewhere like the middle class. So not taking from the corporations is giving to the corporations and taking from the middle class. Duh.

      1. Yes. The governments view is that 100% of everything is their’s to rule over, and they allow us to keep a certain percentage.

    2. He’s just setting up the low-information voters for when he unilaterally raises taxes next year. “OMG, MY TAXES WENT UP! OBAMA WAS RIGHT!! FUCKING CORPORATIONS!!”

    3. Meanwhile the middle class is also stuck with the $100 billion per year that the federal government overpays on welfare and entitlement programs due to fraud and/or mismanagement.

      Which is $98 billion more on an annual basis than what the middle class is “paying” for tax inversions.

      But of course Obama can’t focus on that becase (a) it highlights the incompetenece of the executive branch that he is nominally supposed to be running and (b) it doesn’t do anything to fire up the Democrats liberal base for the mid term election like the totally ginned up tax inversion “outrage” does.

  19. Hey did Obama just start a new war ALL RIGHT HE’S STICKING IT TO THE CORPORATE FAT CATS!

  20. Think of all the money we’ll save when he dissolves the Congress and declares himself President-for-Life.

    1. He needn’t dissolve it. He just treats it like Caligula treated the Senate.

      1. He already appointed a horse’s ass to preside over it.

  21. A friend went to NH “to do some tax free shopping!”. I told them that they were guilt of an illegal tax inversion scheme by trying to avoid buying taxed goods in their own state.

    1. Please tell me your friend was a die hard progtard and thinking about that made their head explode.

    2. It’s called a Use Tax. If you buy something someplace that has a lower sales tax than where you actually use it, then you owe the difference.
      Though how that passed Commerce Clause muster I have no idea. Sure seems to me like it’s states levying tariffs on imported goods.

      1. The goods cost the same as they would have if you bought them in your home state, so no.

  22. Becoming president was about the worst thing that could happen to Obama.

    Exposing him as the feckless narcissistic buffoon he is hasn’t exactly done the rest of us much good, either.

  23. “…and I’m glad that [Treasury] Secretary [Jack] Lew is exploring additional actions to help reverse this trend.”

    Any chance you might explore making the US corporate tax code competitive with the rest of the world? Maybe? Just a thought.

  24. And so too with his executive action cracking down on corporate inversions: “Both Lew and Obama have said that they would prefer to see Congress take action to prevent inversions, but lawmakers have been deadlocked.”

    My copy of the Constitution seems to be missing the clause where Congress not passing a bill allows the president to legislate unilaterally.

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