Paul Driessen
It’s no mystery why American companies have
stockpiled over $2 trillion of overseas earnings in foreign bank accounts. If
they bring it to the United States, the IRS would grab 35% of it. That’s the US
corporate tax rate – the highest in the developed world, double the average in
EU nations.
Medtronic found a creative way to repatriate its
cash, allowing it to bring money to the USA subject to just a 12.5% tax. The
company acquired Covidien, another, smaller medical device firm in Ireland and
will establish its formal headquarters in Dublin, thereby slashing its tax rate
by two-thirds, and leaving it with far more cash for plants and equipment,
innovation, hiring and keeping workers, and tapping new markets.
Pharmaceutical, biotechnology, healthcare and other
companies have concluded or are pursuing similar “tax inversion” strategies.
The actions have outraged the White House, “progressive” activists and many
Democrats in Congress – except when President Obama’s BFF Warren Buffett
engineered Burger King’s acquisition of Canada’s Tim Horton café and bakery
chain.
The President says the practice is “unpatriotic” and
“immoral,” calls the companies “corporate deserters,” and says businesses must
start acting like “good corporate citizens.” Congressional Democrats have
issued similar denunciations and want inversions prohibited or punished.
They’re barking up the wrong tree.
The proper solution is comprehensive tax reform.
However, Republicans want to address both corporate and individual tax issues,
Democrats insist that only corporate taxes on the table, and Mr. Obama is
typically not inclined to do the hard work of forging bipartisan compromises.
Instead, he wants his IRS and Treasury Department to review “a broad range of
authorities for possible administrative actions” and ways to “meaningfully
reduce the tax benefits after inversions take place,” as one Treasury official
put it.
Companies, workers and investors are bracing for the
coming executive fiats. The diktats epitomize a huge problem that neither
Congress nor the courts have been willing to address, but which continues to
drag our nation’s economy and employment into the abyss: an out-of-control
federal bureaucracy that is determined to control virtually every aspect of our
business and personal lives – at great cost, for few benefits, and with little
or no accountability for mistakes or even deliberate harm.
Of course we need taxes, laws and regulations, to
set norms and guidelines, safeguard society, punish miscreants and pay for
essential government programs. No one contests that. The question is, How much?
What we need right now is regulatory patriotism – and Executive
Branch morality, citizenship, and fealty to our Constitution and laws. The
federal behemoth today is destructive, and unpatriotic.
* The confiscatory 35% corporate tax rate is
embedded in a Tax Code that’s 74,000 pages long, counting important cases and
interpretations. It totals some 33 million words (compared to 788,280 in the
King James Bible) and is loaded with crony corporatist provisions and complex,
indecipherable language.
* A 906-page, 418,779-word (un)Affordable Care Act
that has already metastasized into more than 10,000 pages of complex, often
contradictory regulations, with more interpretations and clarifications to
come.
* The 2,300-page Dodd-Frank law has already spawned
over 14,000 pages of banking and financial rules.
* Over 175,000 pages in the Code of Federal
Regulations are coupled with more than 1.4 million pages of tiny-type Federal Register proposed
and final rules published just since 1993, at the rate of over 71,000 pages per
year. Doctors, patients, insurers, businesses large and small – much less
average citizens – cannot possibly read, comprehend or follow this onslaught.
* At least 4,450 federal crimes are embedded in those
laws and regulations (with some 500 new crimes added per decade) – often for
minor infractions like failing to complete or file precisely correct paperwork
for selling orchids or importing wood for guitars. Neither inability to understand complex edicts,
lack of knowledge that they could possibly exist, nor absence of intent to
violate them is a defense, and the “crime” can bring military swat teams
through doors, and land “violators” in prison for months or years.
* Production Tax
Credits and other sweetheart “green” energy
subsidies and grants total some $40 billion a year – for ethanol
producers and folks like Tesla CEO Elon Musk and Mr. Tom
Kiernan, who is both CEO of the American Wind Energy Association and treasurer
of the League of Conservation Voters, which gives millions to mostly Democratic
candidates to perpetuate the arrangements.
* American businesses and families must pay $1.9 trillion
per year to comply with these mountains of regulations. That’s
one-eighth of the nation’s Gross Domestic Product; it’s almost all the
corporate money now held overseas: $5,937 a year for every American citizen –
and far more than the $1.6 trillion in direct economic losses that re-insurer Munich Re blames
on weather-related disasters between 1980 and 2011.
* $353 billion of these regulatory costs are
inflicted by the Environmental Protection Agency alone, say Competitive
Enterprise Institute experts who prepared the $1.9 trillion regulatory costs
analysis for 2013.
Even worse, these criminal complexities and costs are
being imposed by increasingly ideological, left-of-center, anti-business
“public servants” who target conservatives and are intent on advancing
President Obama’s agenda of “fundamentally transforming” the United States.
They are determined to redistribute wealth, pit economic and ethnic groups
against each other, close down coal-fired power
plants, ensure that electricity prices “necessarily skyrocketing,”
and stop drilling, mining, ranching, fracking and pipelines.
Poll after poll finds Americans focused on jobs and
the economy, and on ISIL, terrorism and Ebola. Not so our federal government. Secretary
of State John Kerry says climate change is “the world’s most fearsome weapon of
mass destruction,” posing “greater long-term consequences” than terrorism or
Ebola. For EPA the biggest issues are global warming, “environmental
justice” and “sustainable
development.”
How is the US economy responding to
these policies? Median household income is down $2,000 since Obama took office,
while costs of living continue to rise. Despite the subsidies, electricity
prices have soared 14-33% in states with the most wind power. Some 45 million
Americans now live below the poverty line – a 50% increase over the 30 million
in poverty on inauguration day 2009.
While the official unemployment rate is now under 6%
for the first time in six years, University of Maryland economist Peter Morici
puts the real jobless
rate at closer to 20% – which includes the millions who have given
up looking for work, those who want to work full-time but must settle for
part-time, and students enrolled in graduate school because their employment
prospects are so bleak.
The labor force participation rate now stands at
62.7 percent, the lowest level in 36 years, with over 92 million adults not
working. Over the past six years, one million more Americans have dropped out
of the labor force than have found a job.
Indeed, a hallmark of the Obama recovery is its
unique ability to convert three full-time jobs with benefits into four
part-time positions with no benefits – and then say unemployment is declining.
It’s hardly surprising that dozens of senators and
congressmen who voted with Mr. Obama 90-99% of the
time now want to be seen as “moderate independents” – and do not want to be seen with the President.
But as President Obama told Northwestern University
students October 2, “Make no mistake, [my] policies are on the ballot, every
single one of them.”
He’s absolutely right. So are his economic and
employment records. Time will tell how many people remember that when they vote
November 4.
_________
Paul Driessen is senior policy analyst for the
Committee For A Constructive Tomorrow (CFACT) and Congress of Racial Equality
(CORE), and author of Eco-Imperialism:
Green power - Black death.
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