I don't think readers will be surprised to learn that I don't have any particular moral problem with tax inversions, reverse acquisitions that allow companies to take advantage of lower foreign tax rates. The US has perhaps the most costly and unwieldy tax code in the world, made worse by our unique insistence on double taxation of foreign earnings that prevents companies like Apple from repatriating billions of dollars. My tax plan begins with the elimination of corporate income taxes altogether, not only as an efficiency and growth step but as a huge step in fighting cronyism.
So I certainly don't share all this creepy Leftist desire for loyalty oaths and such from corporations. But I do have a concern about the economy. Over the past couple of years, it appears that a lot of corporate borrowing has been to:
- Buy back their own stock
- Reduce their tax rate, in part through inversions (apparently over 2/3 of 2014 M&A volume is inversions)
When the two best investments a company can find are in its own stock and in reducing tax rates, then there appears to be a problem with the underlying universe of investment opportunities.
Actually, the best investment our company has found this year is in closing operations in California and escaping that regulatory and litigation mess.