The Associated Press published “US cracks down on companies moving overseas”. In that article, they reported that,
“ The Obama administration cracked down Monday on certain overseas corporate mergers and acquisitions, aiming to curb American companies from shifting their ownership abroad to shirk paying U.S. taxes.
“New regulations from the Treasury Department will make these co-called corporate inversions less lucrative by barring creative techniques that companies use to lower their tax bill. Additionally, the U.S. will make it harder for companies to move overseas in the first place by tightening the ownership requirements they must meet.
“This action will significantly diminish the ability of inverted companies to escape U.S. taxation,” Treasury Secretary Jacob Lew said. He added that for some companies considering inversions, the new measures would mean inverting would “no longer make economic sense.”
So, after 20 years of enacting NAFTA, GATT and other global free trade treaties to allow, encourage and even force US corporations to relocate their industrial factories and jobs overseas, the government is now reversing course.
Originally, government didn’t mind that global free trade would diminish America’s industrial base, cost American jobs, and lower the American people’s standard of living. After all, it’s not as if the government has any responsibility for the prosperity of average Americans.
Global free trade would cut labor costs and thereby increase the profit margins for multi-national corporations. Higher corporate profits should result in higher tax revenues for government (or at least more generous political campaign contributions (bribes) for Congress).
But now, there’s been a dramatic and unforeseen complication: allowing US corporations to emigrate to foreign countries hasn’t merely reduced the jobs, wages and standard of living for the great unwashed—it’s even cutting into government revenues!
Who’d’ve thunk it, hmm?!
What economist could possibly have had brains enough to predict that if we signed NAFTA, GATT and other global free trade treaties and thereby virtually forced American industries to relocate to Mexico, China or Bangladesh, we’d not only destroy the American people’s standard of living but also reduce government revenue?
Well, the government is now aware this unexpected, “black swan” consequence, and making the necessary corrections. Government doesn’t intend to bring back our industries or jobs to help the American people. But government does plan to prevent corporate headquarters, corporate profits, and corporate tax revenues from also leaving.
Why? Because, here in the “Land of the Free,” our most important product is big government. Therefore, we must fund and worship big government, no matter what.
Therefore, while government can screw over the American people, it must be protected from the consequences of its own fornication. Thus, big corporations can move their industrial facilities and jobs overseas, but not their corporate headquarters. Corporations can still make products with cheap labor in China in order to maximize their profits, but they have to keep their corporate profits in the US where they can be taxed to support our beloved US government.
“Global free trade” means that corporations can ship the American people’s jobs overseas, but not their taxable revenues.
We may have “global free trade,” but we will never have “global tax-free trade”.
Government of the people, by the government and for the benefit of big government. That’s our new American motto.