In an academic article, reported yesterday in The New York Times (and kudos for that), entitled “Competitiveness” Has Nothing to Do With It”, Edward D. Kleinbard of the USC Gould School of Law writes (and you gotta love the accessible kick-off):

In the movie Night After Night, a young and naïve coat check girl admires Mae West’s jewelry. “Goodness,” says the woman, “what beautiful diamonds!” – to which Mae West replies, “Goodness had nothing to do with it.”And so it is with the recent wave of corporate inversion transactions.2

Despite the claims of corporate apologists, international business “competitiveness” has nothing to do with the reasons for these deals.

And:

Heather Bresch, the CEO of Mylan, a pharmaceutical manufacturer that is pursuing an inversion into a Dutch firm, effectively spoke for many other chief executives when she recently gave an interview describing herself as entering into the inversion deal only “reluctantly.”5 In her telling, she has abandoned hope that Congress will overhaul the Code to make U.S. companies “more competitive,” and therefore must pursue a tax-driven redomiciliation in the Netherlands against her patriotic instincts, and even though (and here is a point that Ms. Bresch forgot to mention) the merger will subject her firm’s taxable owners to capital gains tax. But all this is a false narrative: U.S. multinationals’ “competitiveness” arguments are almost entirely fact-free. [emphasis added]

Well, he meant to say: they lie.I invite you to read the entirety of his discussion of “stateless income” but the upshot:

In the international arena, U.S. multinational firms have established themselves as world leaders in global tax avoidance strategies, through the generation of stateless income. The result is that many well-known US multinationals today enjoy single-digit effective tax rates on their foreign income, and effective tax rates on their worldwide income far below the nominal 35 percent federal corporate tax rate.[emphasis added]

Essentially, Kleinbard eviscerates the nonsense about “competitiveness” as a reason for tax inversions. And, he, then, warns, in regards to tax inversions:

“…the case for action is urgent, both to protect the U.S. domestic tax base and to preserve existing law’s premises of how the international tax system is supposed to operate. Inversions are an immediate threat to fiscal stability, because they enable inverted firms to strip their U.S. domestic corporate tax base, and to use existing offshore cash to fund dividends or stock buy-backs to U.S. shareholders, which today cannot be done without paying U.S. tax. (I briefly discuss the risk of tax revenue hemorrhaging below.) And once a company has inverted, it is gone: the United States will find it difficult to undo the damage to the tax base in subsequent corporate tax reform.[emphasis added]

Corporate tax burdens are not too high and do not impede growth or competition. And as CTJ has pointed out, two trillion dollars is stashed overseas…that’s a far better money-laundering operation that organized crime.So, you ask, logically, why does this foolishness continue? It’s pretty simple: the political leadership of both parties just parrots this line, year after year. Yes, part of it has to do with political corruption (read: campaign finance system).

But, just as much of it has to do with the acceptance of the false line of idiotic rhetoric about the “free market”. For decades all we hear, from both parties, are the repeated stories about the “job creators” in the vaunted world of the “free market” who need tax breaks and “free trade” deals and all this other crap to remain “competitive”–even if the benefits of “competitiveness” never find their way into the pockets of the underpaid, poverty-stricken workers who are the source of the profits.