Tags: Olson | tax | overseas | patriotism

Former Fed Gov. Olson: Patriotism Card Won't Stop Companies From Moving Overseas

By    |   Friday, 29 August 2014 10:24 AM

President Barack Obama and others say companies moving overseas to lower their taxes are unpatriotic.

That's tiresome scolding that's doomed to fail, says a former Federal Reserve Board Governor Mark Olson.

Playing the patriotism or loyalty card is an old trick that rarely works, Olson, chairman of Trelian Risk Advisors, writes in an article for American Banker.

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U.S. automakers used it to urge Americans to buy their cars instead of cheaper, less expensive imports. Main Street vendors use it against Wal-Mart. The Chicago Cubs use it to draw regional fans.

"When patriotism or loyalty is the principal justification for a proposal, you can be sure that you are being asked to back a losing idea," states Olson, a former bank executive. "Of these three examples, only the Cubs, for reasons that defy explanation, have been able to maintain fans on that basis."

More American corporations are fleeing U.S taxes by completing so-called tax inversions — moving their corporate headquarters to other nations by acquiring or being acquired by foreign companies. The Obama administration is considering ways to block the deals without Congressional approval.

Unless the tax code is changed, its effort will fail, Olson asserts. The current tax code motivates corporations to move overseas. As U.S. corporate tax rates are the highest in the developed world, moving overseas can net substantial savings. And it's relatively easy to do. No longer do corporations need to move buildings, equipment or employees. All they probably have to do is move a few key personnel and create some new paperwork, he notes.

"Asking corporate America to ignore the potential savings offered by inversions without addressing the problematic U.S. tax code is both unreasonable and unfair," Olson argues.

The United States should follow the example of automakers, which stopped appealing to patriotism and started making better cars, he says. In other words, the best way to stop corporations from moving overseas is to make them a better offer.

Washington Post columnist Charles Krauthammer also mocks Obama's patriotism accusations and calls for reducing corporate tax rates.

"Democrats used to wax indignant about having one’s patriotism questioned. Now they throw around the charge with abandon, tossing it at corporations that refuse to do the economically patriotic thing of paying the highest corporate tax rate in the industrialized world."

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President Obama and others say companies moving overseas to lower their taxes are unpatriotic. That's tiresome scolding that's doomed to fail, says a former Federal Reserve Board Governor Mark Olson.
Olson, tax, overseas, patriotism
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2014-24-29
Friday, 29 August 2014 10:24 AM
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