No Loyalty, Just Profits

[Content Note: Exploitation.]

One of the things I've written many times before (ex. here) is that corporations have no loyalty. They may have been deemed persons, but they are not patriots. And they will move on to the next emergent empire as soon as they've bled this one dry. Or at the slightest hint of an expectation that they have some responsibility toward sustaining the country that has sustained them:

Washington policymakers are bracing for a wave of corporations to renounce their U.S. citizenship over the next few months, depriving the federal government of billions of dollars in tax revenue and stoking public outrage ahead of the Nov. 4 congressional elections.

So far this year, about a dozen U.S. companies — including such well-known brands as Medtronic medical devices and Chiquita bananas — have merged with foreign firms and shifted their headquarters offshore to avoid U.S. taxes, analysts say.

Dozens of additional deals are in the works, according to administration and congressional officials, and other companies are quietly contemplating the move. Last month, CVS Caremark chief executive Larry Merlo met with Sen. Charles E. Schumer (D-N.Y.) and urged him to act to stop the rash of expatriations. Otherwise, Schumer said that Merlo warned him, CVS "might be forced to do it, too," to duck a total tax bill expected this year to approach 40 percent.

"There's a huge number coming," Schumer said in an interview. "We hear there are going to be several big announcements in August."

The maneuver, known as tax "inversion," has been around for decades, but the pace has accelerated in recent years as U.S. firms have expanded overseas and other nations have adopted lower tax rates. At the same time, company executives have grown increasingly frustrated with Washington, where political gridlock has stymied efforts to reduce a 35 percent federal corporate tax rate that is higher than in any other advanced economy.

"What we're seeing is one more manifestation of why the business tax structure needs to be fixed," said John Engler, president of the Business Roundtable, an association of chief executives at some of the nation's largest corporations. "We're the proverbial frog that's being boiled in the water, and a few frogs have decided to jump out."

Last month, President Obama loudly questioned the patriotism of inverted companies, calling them "corporate deserters" who are abandoning their country "just to get out of paying their fair share of taxes. ...My attitude is, I don't care if it's legal. It's wrong."

So let's say we decrease the corporate tax rate. What's next? If corporations complain that workers just have too gosh darn many rights in the US, making them marginally more difficult to exploit than in another country, do we erode workers' rights even further? If corporations complain that other countries don't force them to contribute to paying for workers' healthcare at all, do we agree to that?

And this isn't about these companies' abilities to continue to pay (or even continue to employ) their employees. Of course it isn't. It's about their ability to pay their shareholders a nice percentage of an ever increasing mountain of profit. It's not like most of these companies are at risk of going out of business; it's that their businesses might be worth slightly less.

Shareholders will make money no matter where they go.

The free market solves everything, we're told. Sure it does. And right now, the invisible hand of the market is packing a suitcase.