Robert Reich: How To Stop Companies Abandoning America

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Apple CEO Tim Cook at a media event in San Francisco on September 7. Robert Reich writes that Apple is only the latest big global American corporation to use foreign tax shelters to avoid paying its fair share of U.S. taxes, and corporations that desert America should no longer be entitled to the advantages of being American. Beck Diefenbach/reuters

This article first appeared on RobertReich.org.

Apple is only the latest big global American corporation to use foreign tax shelters to avoid paying its fair share of U.S. taxes. It’s just another form of corporate desertion.

Corporations are deserting America by hiding their profits abroad or even shifting their corporate headquarters to another nation because they want lower taxes abroad. And some politicians say the only way to stop these desertions is to reduce corporate tax rates in the U.S. so they won’t leave.

Wrong. If we start trying to match lower corporate tax rates around the world, there will be no end to it.

Instead, the president should use his executive power to end the financial incentives that encourage this type of corporate desertion. President Barack Obama has already begun, but there is much left that could be done.

In addition, corporations that desert America by sheltering a large portion of their profits abroad or moving their headquarters to another country should no longer be entitled to the advantages of being American.

1. They shouldn’t be allowed to influence the U.S. government. They shouldn’t be allowed to contribute to U.S. political campaigns, or lobby Congress, or participate in U.S. government agency rule-making proceedings. And they no longer have the right to sue foreign companies in U.S. courts for acts committed outside the United States.

2. They shouldn’t be entitled to generous government contracts. “Buy American” provisions of the law should be applied to them.

3. Their assets around the world shouldn’t any longer be protected by the U.S. government. If their factories and equipment are expropriated somewhere around the world, they shouldn’t expect the United States to negotiate or threaten sanctions, or use our armed forces to protect their investments. And if their intellectual property—patents, trademarks, trade names, copyrights—is disregarded, that’s their problem too. Don’t expect any help from us.

In fact, their interests should be of no concern to the U.S. government—in trade negotiations, climate negotiations, international treaties reconciling American law with the laws of other countries or international disputes over access to resources.

They don’t get to be represented by the U.S. government because they’re no longer American.

It’s simple logic. If corporations want to desert America in order to pay less in taxes, that’s their business. But they should no longer have the benefits that come with being American.

Robert Reich is the chancellor’s professor of public policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, and Time magazine named him one of the 10 most effective Cabinet secretaries of the 20th century. He has written 14 books, including the best-sellers Aftershock, The Work of Nations, Beyond Outrage and, most recently, Saving Capitalism. He is also a founding editor of The American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences and co-creator of the award-winning documentary Inequality for All.