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U.S. Opinions: New York

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In defense of turncoats

From an editorial Friday on Bloomberg View:

Another day, another turncoat corporation. U.S. companies seem frantic to renounce their U.S. citizenship and lower their tax bills by acquiring overseas rivals and adopting their domiciles. A dozen companies are exploring such a move; nearly 50 have completed the switch since 2005.

Treasury Secretary Jack Lew calls the dodge, known in the trade as a tax inversion, unpatriotic. Lawmakers may be incensed, yet the fault is theirs. Companies that reincorporate in low-tax countries are rational actors, not traitors. Frustrated executives are merely running their businesses in a tax-efficient way – as they’re paid to.

Until the parties can agree on a thorough overhaul, the defections will continue.

Rep. Dave Camp, the Michigan Republican who chairs the Ways and Means Committee for a few more months, leaves behind a promising blueprint. It would lower corporate taxes to 25 percent and tax only U.S. income (the U.S. is alone among the leading countries in taxing worldwide profits). It would also end many breaks, deductions and loopholes.

Companies would no longer need to defect or hire lobbyists to win special deals. The result would be a simpler, fairer corporate tax system that lets executives get back to running their businesses.

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