Should US Tax Corporations More?

There seems to be a concerted effort from the left wing to paint corporations as tax dodgers. Their mouth piece Nobel Laureate Paul Krugman opined :

Which brings us to the tax-avoidance strategy du jour: “inversion .” This refers to a legal maneuver in which a company declares that its U.S. operations are owned by its foreign subsidiary, not the other way around, and uses this role reversal to shift reported profits out of American jurisdiction to someplace with a lower tax rate.

The most important thing to understand about inversion is that it does not in any meaningful sense involve American business “moving overseas.” Consider the case of Walgreen , the giant drugstore chain that, according to multiple reports, is on the verge of making itself legally Swiss. If the plan goes through, nothing about the business will change; your local pharmacy won’t close and reopen in Zurich. It will be a purely paper transaction — but it will deprive the U.S. government of several billion dollars in revenue that you, the taxpayer, will have to make up one way or another.

Does this mean President Obama is wrong to describe companies engaging in inversion as “apologists for inversion,  who tend to claim that high taxes are driving businesses out of America, are indeed talking nonsense. These businesses aren’t moving production or jobs overseas — and they’re still earning their profits right here in the U.S.A. All they’re doing is dodging taxes on those profits.

To be sure, corporations have no soul or loyalties. The capitalistic role of corporations is to make money for their owners. It seems funny and contradictory to me that a government wants a global marketplace allowing foreign corporations to operate freely within the USA - and yet denies home grown corporations to be globalized.

I reverse the question - Why is the USA allowing foreign entities to escape the full brunt of the USA tax system? Why would there be an advantage to being a foreign corporation UNLESS foreign corporations were already exploiting this advantage?

Corporations are taxed twice in the USA - once at corporate level, and once to the owners with profit distributions. The whole concept of taxes is misguided as currently applied:

• Why tax income? Is income bad? Without income, there can be no spending unless one believes that you need only to borrow to spend.
• Why allow a foreign made product which has paid no USA taxes to be sold against a USA product which has paid in all sorts of taxes (income, property, FICA, Social Security, ....)?

Like most issues, arguments on corporate taxation are complex. The error we continue to make is believing the issue is black or white - or believing the slanted arguments of those with an agenda.

The Econintersect Economic Index for August 2014  is showing our index at a 3 year high. Outside of our economic forecast - we are worried about the consumers' ability to expand consumption although data is now showing consumer income and expenditures growth are similar. The GDP expansion of 4% in 2Q2014 is overstated as 2.1% of the growth would be making up for the contraction in 1Q2014, and 1.7% of the growth is due to an inventory build. 

The ECRI WLI growth index value has been weakly in positive territory for many months - but now in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.