Congress Obsesses on Trivia While Inversions (Moving The Money to Where It Is Not Taxed) Continue
To Wall Street dealmakers, and now to most boards of directors, an inversion is a cross-border merger that allows the buyer to reincorporate in a more tax-friendly jurisdiction.
Traditional economic history was tied to nations. Britain prospered because it exported its raw material needs to cheap colonies and focused capital on developing high profit manufacturing at home. Today’s nations are still trying much the same thing … look at China or India. BUT … now the big returns come not from making things but from managing the money itself. Even better … making money is a low capital investment, high profit business.
So … the natural impulse is to outsource the company headquarters to wherever the taxes are least. Of course this can impoverish the countries that built those companies and foreign management separate from production can lead to a lack of concern about pollution or adverse health effects.
Meanwhile, Congress is obsessed with Benghazi, law suits vs. the black president, mythical IRS issues, etc.