Why corporations shouldn't pay any taxes — zero, zilch, nada

It's time to stop feigning surprise and outrage when corporations relocate abroad. They're just logically and legally fleeing an aggressively confiscatory tax code.

GE
(Image credit: (Imaginechina/Corbis))

"It ain't right," says President Barack Obama. American companies who dodge the taxman by merging with overseas rivals are "renouncing their U.S. citizenship" and should be branded "corporate deserters," he says. And in name of "economic patriotism," Obama wants Congress to quickly close the corporate "inversion" loophole so these Benedict Arnold multinationals keep paying their fair share to Uncle Sam.

But patriotism, at least of the superficial sort, and business don't mix. For example, after the 9/11 terror attacks, investors wondered if there would be a "patriots rally" once the New York Stock Exchange reopened. Well, there wasn't. Instead, the Dow Jones Industrial Average fell by more than 7 percent on Sept. 18, 2001, one of largest one-day declines in Wall Street history. With fear of new attacks running high, there was little incentive for investors to stay in the market — even though it would have been the "patriotic" thing to do.

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James Pethokoukis

James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places.