Is the United States In or Out on Globalization?

US political leaders are fretting about the need for tax reform as US companies purchase partners in tax-friendly countries, relocating their headquarters and tax base. The latest example is Burger King’s proposal to purchase Tim Hortons restaurant chain, based in Canada. The United States may be ambivalent on globalization, but there is no turning back, argues strategic communications consultant Edward J. Reilly for Roll Call. Suggestions for a punitive response have “already triggered a number of unintended and unwelcome consequences ranging from more U.S. companies rushing to move their headquarters overseas or sell themselves to foreign companies, to foreign multinationals threatening to reduce their investment and hiring at their U.S. subsidiaries,” Reilly explains. The current US corporate tax is the world’s highest or developed nations, at around 35 percent, and includes plenty of loopholes. Not all companies can take advantage of the loopholes. Any change in the tax code creates a new set of winners and losers. Still, US Congress should not ban inversions, he concludes, but rather undertake the difficult task of reforming the tax code and reducing loopholes. – YaleGlobal