The Corporate Inversion Deadbeat: A Simple Fix

The solution to the inversions that many U.S. corporations are doing is to raise capital gains taxes for those who buy their stock. We know the CEO does everything in his power to keep up the stock price for he always stands to benefit from higher prices. We also know that investors like the lower capital gain taxes they now enjoy. When capital gains taxes go up (only for the inverting company), guess what corporations will see their stock prices go down because of the sell off.

Will this impact the worker? Hardly. The volatility of the stock price has little short-term effect on day-to-day operations. When it comes time to offer more stock for expansion, the lower price means that they will bring in less but, so what, they'll just have to offer more stock. If there are no buyers, well they can try inverting themselves back to the homeland. But, my guess is that they'll be doing that sooner rather than later.

This is a plan that says that the corporate deadbeat is free to go to Ireland or Bermuda and we will just get the taxes elsewhere. How much should they go up? Why, in direct proportion to what we are no longer getting from them to help run the country! Hedge funds that want to include such deadbeats will also get taxed at the higher rate.

Yeah, your move, MF!



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