The popular new Wall Street dance known to every corporate accountant as tax inversion is under attack from those who claim to speak for Main Street. “My attitude is I don’t care if it’s legal, it’s wrong, ” says President Barack Obama. Senator Sherrod Brown is so sure that tax inversion is iniquitous that he wants a boycott of the latest US company to want to do the inversion dance: Burger King. Mr Brown wants its customers to bite instead into a Wendy’s or a White Castle for the sake of American pride and prosperity.
The company’s offence is that inversion is an act of alleged infidelity in which a US multinational with substantial overseas revenues reincorporates in a foreign jurisdiction with a lower corporate tax rate. Upwards of 49 companies have done it; 20 others are said to be flirting with the idea.
Critics see inverters as tax dodgers, evading their responsibility to pay for what they get from America. Mr Obama has talked of inverters wanting a free ride on US business “architecture”. It is not an unsubstantial point but flourishing, innovative corporations are themselves an essential part of the structure. Does it make sense to inhibit their capacity to take financial risks on investment or to demonise corporations for fulfilling their duty to their shareholders?