If there is such a thing as “corporate patriotism,” to use a phrase of President Barack Obama’s, it’s surely no longer of the 1950s-style assertion that “what’s good for General Motors is good for America.”
With worldwide markets — and shareholders, to whom corporations owe a fiduciary responsibility — the idea of patriotism might seem out of date. That rubs many Americans the wrong way, as some 50 big companies over the last few years have “merged” with foreign companies; often, that resulted in companies avoiding major tax liabilities in the United States.
The Obama administration’s executive orders will limit the tax benefits of such “inversions,” but the presidential steps are necessary only because Congress has once again failed to act on a broad challenge, which is the reform of the corporate tax code.
We now have the worst of both worlds, a high formal top rate for corporations and a code riddled with special interests’ loopholes that mean some companies dodge taxes if they’re in favor with Congress and the lobbyists who call Capitol Hill home.
Now there is patriotism.
We need a lower tax rate and elimination of loopholes, combined. With the budget deficit facing the United States, we can’t afford a lower top rate while retaining the breaks the well-connected have previously used.
Revenue-neutral corporate tax reform is the way forward, rather than executive orders tinkering with the system.