Obama is Trying to Legally Prevent People from Leaving America

Remember back in 2012, when good old crazy uncle Ron Paul said that he opposed building a wall on the Southern border because he was afraid it might be used to try to keep Americans in instead of keeping illegal immigrants out? Turns out we might owe at least a partial apology to laughing at Ron Paul for this one, because Barack Obama is attempting this very thing. Of course, he isn’t doing it using a wall, he’s doing it using unilateral executive action that purports to make it more difficult for companies to leave the United States via “inversions.”


WASHINGTON (AP) — The Obama administration on Thursday issued new rules aimed at reducing the tax benefits available to companies that move their tax addresses overseas.

The new rules follow an initial package of rules that the administration implemented in September 2014 in response to a wave of announcements by U.S. companies seeking to lower their taxes by moving their headquarters overseas. Those included an announcement in August of last year by Burger King that it planned to acquire Tim Hortons, the Canadian coffee and doughnut chain.

Treasury Secretary Jacob Lew said, however, there is only so much the administration can do to prevent U.S. companies from pursuing the maneuver, known as a tax inversion. He again urged Congress to pass legislation.

“Our actions can only slow the pace of these transactions. Only legislation can decisively stop them,” Lew told reporters on a conference call.

Lew is half right. He’s right about the half that says the treasury regulations can’t stop inversions; he’s wrong about the idea that legislation can. Corporations, you see, enjoy as much or more freedom of movement about the globe than people do. In fact, companies flat out have foreign governments courting them to relocate headquarters or operations. A law that prevented companies from doing that would be more reminiscent of Soviet Russia than it would of America, frankly, and would be a good deal less effective than the Berlin Wall since these companies already have operations overseas and can’t be deterred from moving by a wall.


Here is a novel idea; why not try to prevent this massive loss of tax revenue via a method that would be both more likely to work and less like a futile gesture by an authoritarian government? Something like, maybe, major corporate tax reform so that our corporate taxation rate isn’t higher than every modernized country in the world (with the exception of Japan, whose economy has likewise been crippled by their effective corporate tax rates)? Instead of futile attempts of dubious legality to force companies not to leave, why not entice them to stay with favorable business conditions?

The simple answer is that the free market is just not something liberals understand or believe in, so they prefer instead the force of a gun, even when they know it will not work.


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