Invert this pal!

"But Mr. President, here is where the rubber meets the road. Companies don't have to do squat in this country if they choose not to."

I did not think it would take too long. Our statist President. does not like this - no, not at all. And because he is a socialistic, progressive, statist, he can't see the forest through the trees. On what this time? Why United States corporations are more and more doing this restructure thing called inversion.

Let's look at the Medtronic/Covidien merger. Why in the world would a good Minnesota company like Medtronic want to merge with an Irish company like Covidien? One word - money. From a business perspective, it is a smart move. Medtronic acquires Covidien and then makes Ireland the business headquarters of Medtronic. Instead of paying the confiscatory 35% United States corporate tax, Metronic now pays somewhere between 12.5% and 18.0% tax in Ireland. Most of the operations stay over here, and Metronic saves a boatload of money. 

"But wait just a dang minute!" our President shouts. "That 35% tax belongs to ME, not to YOU! And because you have pulled such a dastardly trick, I am going to make sure there is going to be a rule or a law which will punish companies like you!!!" But Mr. President, here is where the rubber meets the road. Companies don't have to do squat in this country if they choose not to. They can pull up lock, stock and barrel and move elsewhere. At least with inversion, people stay employed here and pay taxes. If the company moves totally offshore, not only will the corporate tax be gone, but also the individual taxes as well.

In the past ten years (most of them during the Obama regime), 47 companies have chosen to go the inversion route. 47 companies! And why? 35% in back breaking tax dollars paid to the United States Treasury.

But hold on. According to an Investopedia article dated today, the deal with New York based Pfizer and the Irish company Allergan is now off. Why? Due to a very recent rule passed by U.S. Treasury, Pfizer got spooked. By the way (just as an aside), I thought only Congress could make laws. Seems to me that Congress could step in and tell Treasury to sit down and shut up on this deal.

Have we heard the last of inversions or other such similar moves? I think not. So long as we have a 35% confiscatory tax, corporations will be looking for ways to get around paying it. And that would include leaving the country all together. Should that happen, crocodile tears would really start to flow out of Washington. Why? Because there would not be a damn thing the Administration could do to stop it.