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It must be election season. President Obama has ratcheted his populist rhetoric to new highs, telling a California crowd that he doesn’t care if it’s legal or not – companies that headquarter overseas in order to dodge America’s bloated, burgeoning corporate tax costs are plain out wrong, and by gosh, he’s going to do all he can to put a stop to it.
Everything, that is, except lower the U.S. corporate tax rate.
And what a corporate tax rate it is. Hitting nearly 40 percent, America has one of the highest in the world, according to the investment firm KPMG Capital. Even socialist France is lower, at 33.33 percent. And Japan, which began 2006 with a corporate tax rate comparable to America’s – at 40.69 percent – nonetheless slowly lowered it through the years to its present 2014 level of 35.64 percent.
Thus, the trend of American businesses to turn to inversion as the solution and relocate their corporate headquarters to lands with lesser tax burdens – a legal act, under current U.S. tax law. Drugstore chain Walgreen is the latest to consider the loophole.
And why not? In a country of the free, with a business market and climate that’s supposed to be run and operated by free-market principles, it’s an entirely sane, sensible and smart idea for firms to save dollars where possible. If the cost of doing business in America is just too high, it’s neither a sin of the business to seek out more cost-efficient grounds, nor the responsibility of the business owner to stay put, suffer silently and see profits dwindle just to keep a politician happy.
Yet that’s what Obama is insisting, in most socialistic fashion.
In recent remarks to a Los Angeles crowd, the president demanded a new system of “economic patriotism,” a mirror of what Treasury Secretary Jack Lew called for in a July 15 letter to Senate Finance Committee Chairman Ron Wyden, D-Ore. Lew insisted that “what we need as a nation is a new sense of economic patriotism, where we all rise or fall together.” Obama took that mantra and ran with it, rebuking companies that take advantage of tax inversion – again, legal – as “corporate deserters” and chastising them as “gaming the system,” Bloomberg reported.
In his speech, also reported by the Irish Times, Obama gave a specific shout-out to Ireland – where corporate tax rates sit at 12.5 percent, as they have for years – and mocked: “If you simply acquire a small company in Ireland or some other country to take advantage of the low tax rate [and] you start saying, ‘we are now magically an Irish company,’ despite the fact that you might have only 100 employees there and you have got 10,000 employees in the United States, you are just gaming the system.”
And Obama’s final thrown dagger: “I don’t care if it’s legal – it’s wrong.”
But his rhetoric is decidedly anti-American. Is this what America’s free-market system has become – a populist plaything for the president so he doesn’t have to deal with the real issue, that of his pro-union, anti-business views and policies that are driving the private sector from America? Here’s a more American tactic the president could take to deal with corporate tax loopholes, if he wanted: He could work with Republicans in Congress to find agreeable tax reform ground.
But Obama won’t. And that’s because it’s election season and in the president’s eyes, time to gather the economic downtrodden to cast ballot-box blame at the corporate-funded Republicans.
It’s no coincidence that under this White House, fast-food workers around the nation have found their collective-bargaining voices and erupted in union-driven protests, demanding minimum pay of $15 per hour. In recent protests in Illinois, Kendall Fells, a representative of the Service Employees International Union, told the Associated Press that the main message she wanted to impart was for fast-food workers to do “whatever it takes” to win the $15 per hour concession, even if that meant civil disobedience. Another fast-food worker at a Charleston, South Carolina, protest said workers ought to press the restaurants to close down until they pay up – and perhaps stage some occupy-type takeovers of the facilities in the meantime.
But with a White House that views private sector business as the enemy – the evil capitalist simply on a vendetta to grab as much money as possible from the poor and downtrodden – it’s no wonder such protests and demands are becoming commonplace. Are we socialist or a democratic republic?
Listen to Obama, and we’ve certainly turned the corner toward the former.