Why try to improve tax code when you can punish business?
NEW TREASURY RULES ON CORPORATE INVERSIONS
THE old chestnut is that if something isn’t broken, don’t try to fix it. In the Obama administration, the catchphrase is this: If something is broken, break it some more. This is what U.S. Treasury Secretary Jack Lew has done in the administration’s response to the broken system of corporate taxation. Lew last week issued new rules making it harder for companies to lower their taxes by moving their headquarters, a process known as “corporate inversion.”
Barack Obama’s usual response to a sluggish economy is to slow it down some more. Rather than encouraging U.S. companies to keep and spend more of their money here through tax reform, Obama gets on the demonization train and accuses executives of greed and avarice — if not un-American activities.
Drug companies Pfizer and Allergan are the latest to be run over by this train. The Treasury rule derailed a Pfizer-Allergan merger. Pfizer will be left holding the bag for $150 million — deductible, we assume.
Pfizer CEO Ian Read, writing Thursday in a Wall Street Journal op-ed, reacted to the news with appropriate indignation. “If the rules can be changed arbitrarily and applied retroactively,” Read wrote, “how can any U.S. company engage in the long-term investment planning necessary to compete? The new ‘rules’ show that there are no set rules. Political dogma is the only rule.”
Having never competed in the private sector (you know, the one that pays the taxes to support government), Obama naturally has no empathy for corporate America. That’s true of most politicians, but the president takes it a step further. To put an Orwellian spin on this topic, corporations are bad, government is good. Slapping down two corporations is really good and making government ever more powerful is even better.
Not even the swine in “Animal Farm” could conceive of the cockamamie rules that come out of this administration. In the Obama view, corporations should have no voice in determining the outcome of elections, as well as remain silent in reacting to moves such as the one Lew made. Thus, politicians elected by people of influence favored by Obama (unions, particularly public-sector unions) are free to act without the meddling of those most affected by arbitrary, anti-business rules.
Read noted that Pfizer hasn’t been silent on the U.S. tax code. It has “long worked with Congress to make the U.S. tax system more competitive and fair.” Failing that, the company sought the merger, which “driven by strong commercial and industrial logic, would have made it easier to invest in the U.S.”
One would think Obama, with seven-plus years of slow recovery to his discredit, might favor more investment. Wrong. He favors a smack-down using government muscle to punish success and stymie growth.
Read is exactly right in noting that this “ad hoc and arbitrary attempt to single out and damage the growth opportunities of companies operating within the current law is unprecedented, unproductive and harmful to the U.S. economy.”
While Republicans in the hunt for the Oval Office have pledged to pursue serious tax reform, Obama keeps doubling down on the anti-business, anti-growth status quo. He will leave office early next year having done little to raise the fortunes of average Americans and a lot to increase government’s power to punish success and discourage prosperity.
Remember the Pottery Barn rule applied to the war in Iraq, that if you break it, you bought it? Our tax code is broken. It needs fixing. Instead, Obama and Lew have broken it more but they won’t have to buy it. The shareholders and employees of affected companies will.