Americans continue to rank the economy “and in particular creating jobs” as their top priority for Washington. That’s what makes the Treasury Department’s new, much-ballyhooed rules to deal with corporate tax inversions so confounding:
First, these rules may not even do what the administration says they would. “Some analysts,” the Los Angeles Times reports, “have questioned whether the limited action would dissuade companies from reincorporating abroad.” And “some experts,” MarketWatch adds, “have questioned how much authority the Obama Treasury Department actually has in the area” as it “has little legal ability to block the most common type of inversion.” (This kind of uncertainty, of course, is the natural result of trying to go-it-alone all the time through executive action.)
Second, these rules could actually make the problem worse. Not only is it possible that Treasury’s rules won’t stop these transactions, but they could actually make things worse by forcing companies to consider options that are even worse for our economy, like selling out to foreign competitors altogether. This makes it even harder to bring jobs home and creates a “lose-lose proposition” for America’s workers.
And third, these rules do nothing to address the real problem. As Reuters points out, “Both Democrats and Republicans have said inversions are a symptom of a broken tax code that needs a thorough overhaul…” Indeed, tax reform is one of Speaker Boehner’s five points for resetting America’s economic foundation because of how it would lead to long-term growth and mobility. Yet, the president hasn’t brought parties together to get it done, leaving America’s employers subject to the highest corporate tax rate in the developed world and middle-class families overtaxed. “Until the White House gets serious about tax reform,” Ways and Means Chairman Dave Camp (R-MI) says, “we are going to keep losing good companies and jobs to countries that have or are actively reforming their tax laws.”
All this goes to show that Washington Democrats have no credible plan for our economy – just gimmicks and half-measures like this that make things worse.