The United States government literally clobbers American companies in many ways including through over regulation as well as the tax code. We used to be the paragon of what was possible with a stable republic and capitalism, yet we’re quickly becoming a super nanny state. The irony is that the people who can fix it, are in the very same institutions that created this mess in the first place.
Working with a senior Member of Congress who chaired the tax-writing Ways and Means Committee, I was fortunate to learn a lot, first-hand, about how the Nation’s tax laws are written. Amigos, it can be ugly process. And if you believe in the power of free markets and people, it is frustrating, especially when you see how the tax code is used as a weapon against everything that made this country great.
I’ve had a New York Times article on my desk for two weeks about Walgreens planned corporate move to Switzerland. Yes, you read right. Europe. They want to lower their tax burden and, under the law, Walgreens can re-locate to a country with a lower corporate tax rate. It is a process called inversion. If you’re a shareholder, be happy. That is what a company is supposed to do. Make profits, lower expenses, and find ways to keep bringing value to the consumer.
Of course The New York Times, most Democrats, and some Republicans in Congress, make it sound evil and unpatriotic. In this article, and many others like it, company executives that engage or propose what the Times calls the “tax-skirting tactic known as an inversion,” are shamed. Inversion detractors are usually proponents of the super nanny state. You know the lot, the government knows best crowd.
The article closes with this gem, beating up on Walgreen’s CEO Greg Wasson:
Given all of the benefits Walgreen has received over the years as a United States corporate citizen, it remains curious why Mr. Wasson would seek a new passport.
Is that jab really necessary or relevant? Of course not. But Democrats in Congress and, yes, some Republicans, get very upset when money moves away from Washington, DC’s grip because that means less money for federal government programs. What these people forget is that corporations exist to help shareholders and people like you and me, consumers, and not the greedy Washington, DC machine.
Corporations are important legal fictions, and not as the Left would have it, living and breathing things that are supposed to engage in kooky social re-engineering. As Justice Alito penned in the recent Hobby Lobby Supreme Court decision:
corporations are legal fictions created “to provide protection for human beings. A corporation is simply a form of organization used by human beings to achieve desired ends … the purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees.” (emphasis added)
While I did not like his political views, one thing I really respected about Apple’s Steve Jobs, besides the company he created, was that he focused on delivering quality products and profit to shareholders. Jobs opted to do charity work in the shadows and not using Apple’s brand or corporate profits. He opted to let people decide, on their own time and with their own money, what charitable causes to support.
As the Hobby Lobby case reminds us, the federal government will try to tinker, harass, and force you to do things if you fail to comply with regulatory mandates and many other freedom suffocating devices such as the tax code. Walgreens is looking out for number one, its shareholders and customers. As it should be.
Tackling regulatory reform is an ongoing battle; however, eliminating or reducing corporate tax rates can be done, if people are willing to do so, in rather short order. The House Ways and Means Committee has had a plan on the table that would cut the corporate tax rate to 25%. It would also press forward on many other individual and corporate tax reforms. The Democratic-controlled Senate, facilitated by a group of Republicans, will not even consider the reform package.
Should Walgreens stay in the United States? I hope they do. Yet the United States has the highest effective corporate tax rate in the world and maybe Walgreens has to make this move to stay competitive in the global marketplace. Congress should get its act together and find a way to keep them here, but I doubt they will, at least not as long as the Senate is controlled by Democrats. Whatever the case, if Walgreens decides to move to Europe, it does not make them evil or un-American. Quite the opposite. It is as American as apple pie.