The Obama administration has slapped new penalties on companies (once again without going through Congress) to prevent them from lawfully merging with other companies, where they would have the freedom to move their corporate headquarters to lower-tax countries.

There are many ways to encourage companies to keep their headquarters in the United States, and so far the Obama administration has ignored them all.  It could lower corporate tax rates across the board from 35% to a more competitive rate, it could go to a territorial tax system that doesn’t double tax income, it could enact tort reform, and it could reduce other expensive regulations.

Whenever the government adds new taxes, new regulations, higher minimum wages, higher health care costs, paid family leave laws (as in San Francisco), etc., that encourages companies to invest elsewhere.

It is estimated that corporations are keeping trillions of dollars that they earned outside the U.S.  The corporations do this because the U.S. has one of the highest corporate tax rates in the world and is also one of the few that tax companies on what they earned out of the country. 

If the corporations were allowed to bring this money back to the U.S. without being double-taxed, they could use it to create jobs, pay dividends, and invest in new plants and equipment, all of which would certainly help the U.S. economy.

The U.S is one of few countries in the world that also tax their citizens on what they earn elsewhere.  Why should the government be entitled to money that has been earned overseas and has already been taxed?

When Obama says we need to block corporate inversions, it is strictly because he wants more money for the government to spend. The greed of the government is never-ending.  There is never any concern at all for the shareholders (including pension funds) who actually take the financial risk of owning the stock.

Obama says repeatedly that he is for reducing the corporate tax rate to 28%, but the tradeoff for this is a demand for $1.5 trillion in additional taxes to make government bigger.  It is not a good trade, and the Republicans in Congress shouldn’t give in.