Let’s Hear It For The Bureaucrats!

“Fight Against Stupidity And Bureaucracy”

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In a post way back on July 20 that I called “Why Are The Bureaucrats Destroying What Made America Great?”, I highlighted the fact that the giant American pharmaceutical company Abbvie was planning to relocate to the UK in an effort to get away from punishing US taxes. (Click here if you want to read it.)

I also said that by abandoning the business friendly environment that had made it the wealthiest nation on Earth, the bureaucrats in the United States were creating a hostile place to try to do business to the extend that a growing number were leaving.

Ahem…. better make that, ‘trying to leave’.

Because rather than trying to make the US a more attractive place to do business, Obama’s bureaucrats have instead decided it to make it more difficult for them to leave.

The US government introduced new legislation recently which effectively put an end to the biggest corporate takeover of the year.

In the wake of new rules penalizing inversions, the Illinois based pharmaceutical giant, AbbVie, has walked away from its bid to acquire Shire, the Irish drug maker, for $54 billion blaming “….impact of the U.S. Department of Treasury’s unilateral changes to the tax rules”.

AbbVie will have to pay Shire a breakup fee of $1.6 billion, which is effectively money down the drain.

So who benefits thanks to this new legislation?

No one!

Let’s hear it for the bureaucrats!

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Charles Munger Agrees With Me.

“Fight Against Stupidity And Bureaucracy”

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I always think it’s nice when someone agrees me. Even more so when they are well versed in the subject matter.

Charles Munger is such a guy. And he agrees with me, or at least he would do, had he read a post I wrote recently about Burger King’s move to Canada to avoid high US corporate taxes. (Click here if you want to read it.)

Anyway, we’re saying the same thing, and that’s what matters.

For those readers who don’t know who Charles Munger is, he is vice chairman of Berkshire Hathaway Inc., the world famous investment company headed by Warren Buffet, one of the richest men in the world.

Munger says people who criticize Burger King’s plan to shift its headquarters to Canada, where tax rates are lower, are “stark raving mad”. What they should be calling for are cuts in corporate taxes to encourage business to stay in the US and even relocate there.

More than 40 U.S. companies have reincorporated abroad since 1982.

In fairness it has to be said that Munger does have a vested interest of sorts to stick up for Burger King. Berkshire Hathaway committed $3 billion to help finance Miami-based Burger King’s planned takeover of Tim Hortons Inc., the doughnut maker with headquarters in Oakville, Ontario.

But that’s not why he said what he said. He is smart enough to know what is good for business generally and levying hefty taxes on corporations is not good. In fact he said, “If I were running the world, I would probably have low corporate taxes and get at the well-to-do people in some other way, like consumption taxes.”

Unfortunately President Barack Obama isn’t so smart. He has continued to criticize American companies that move to other nations in search of lower corporate tax bills.

And his Treasury Secretary, Jacob J. Lew, has recently announced new rules aimed at making it more difficult for American companies to lower their tax bills by relocating overseas and that would wipe out the benefits for those that do.

The changes will affect only deals that are completed from now on. But they could include pending inversion deals, like the one involving AbbVie, an Illinois-based pharmaceutical company that is in the process of acquiring its smaller British rival, Shire, or the Minneapolis medical device maker Medtronic, which is acquiring Covidien in Ireland.

And if the government continues on this path what will happen?

I think if US companies are prevented from making these kind of deals by ever greedy and intrusive government legislation they will simply close down altogether in the US. Wealth creation will be lost, many thousands of jobs will be lost and America will lose its long held position as the commercial powerhouse of the world.

When the American people were offered “Change” I don’t think this is what they were expecting.

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Why Are The Bureaucrats Destroying What Made America Great?

“Fight Against Stupidity And Bureaucracy”

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The Sunday Sermon

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Since the government and bureaucrats in the United States abandoned the business-friendly environment that made the country the greatest and wealthiest nation on earth, and replaced that with a legislative and wealth redistributing strategy that is anything but business-friendly, there has been a growing trend for successful companies to leave the US.

It should have been obvious – and indeed it was – to everyone but the morons in Washington. 

 

The latest to try to make a move out of the United States is the pharmaceutical giant AbbVie, currently based outside Chicago, Illinois, but not for much longer if they get their way.

Using a $53 billion acquisition of the Jersey-registered, Irish-headquartered global specialty biopharmaceutical company “Shire”, a deal that will allow Abbvie to reincorporate elsewhere, it plans to leave the high tax US for a more advantageous business environment.

By making this move and escaping United States tax rates, Abbvie will pay lower taxes on its international earnings, get access to overseas cash more cheaply, and be able to acquire other companies without making their earnings subject to United States taxes.

And Abbvie is not alone.

There has been a rush of companies wanting to get out of the United States. Health care companies in particular, such as Medtronic, Mylan, Actavis, Perrigo, Jazz Pharmaceuticals and Endo, have pursued these “inversion deals”, as they are called, with particular zeal.

The moral of the story is simply this.

When a country forgets what has made it great and instead turns into something quite the opposite, all the reasons for its greatness disappear. And the United States is doing this at a time when it is heavily in debt – the most indebted nation in the world by a long way.

The short-termism of trying to grab as much money as possible from companies and individuals will end in failure and disaster for all. People like Obama try to put a fancy misleading name on it and call it “wealth redistribution”. What it really is, is a major disincentive for anyone to want to set up and do business in the United States.

And as you would expect, the idiots in Washington aren’t scratching their heads and wondering why more and more companies are opting to leave the US. Instead the bureaucrats are trying to think of ways to make it illegal for companies like Abbvie to adopt this strategy. 

Treasury Secretary Jacob J. Lew has already sent letters to senior members of Congress, encouraging them to pass legislation halting inversions. The legislation being considered by some lawmakers would be retroactive, and if passed, could impede AbbVie’s ability to reincorporate overseas.

And proving that stupidity is a cross party phenomenon, on Thursday, Senator Orrin G. Hatch, the Utah Republican who is the ranking member of the Senate Finance Committee, responded to calls from the Obama administration to crack down on inversions by saying he supported a short-term fix, although he suggested that the administration’s initial proposal went too far.

It seems fairly logical in my mind that the way to stop this growing exodus, which in the longer term will leave the US a lot poorer and a lot more of its citizens out of work, is to legislate to reduce tax bills, not increase them; to give businesses an incentive to invest and expand in the United States, not to drive them away; and to encourage entrepreneurs to relocate TO the US rather than scramble to get out.

Of course, that’s just in my head. All that is in the heads of the idiot bureaucrats in Washington is self-defeating rubbish like increase minimum wages, increase healthcare contributions, increase taxation, introduce capital controls, increase government bureaucracy so more debt is piled up and the USD$ weakens further, and of course start a few more wars to distract the people from the mess that is being made at home.

So, to pose the question in the title of this post again, why are the bureaucrats destroying what made America great?

Your guess is as good as mine, although while some obviously have malicious intent, I wouldn’t entirely rule out plain old stupidity!

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Did You Know? July’s Facts Start Here.

“Fight Against Stupidity And Bureaucracy”

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Yes, July’s start here.

Another random selection of curious pieces of information.

And another chance for you to find a few things to tell people at the next barby!

Enjoy.

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In Disney’s “Fantasia”, the Sorcerer’s name is

“Yensid”, which is “Disney” backwards.

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The Mongolian navy consists of

seven people and one boat.

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The pavement between the different ‘worlds’ in the Disney parks changes suddenly.

These sensory ‘tickles’ startle you and make you look up and look around,

realizing that your surroundings have changed.

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In 1788

the Austrian army accidentally attacked itself

and lost 10,000 men

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The attachment of human muscles to skin

is what causes dimples.

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Nightmare comes from an old English word “mare”

that refers to a demon who suffocates you in your sleep

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Eisenhower played a big role in popularizing golf.

He installed a putting green at the White House

and played more than 800 rounds while in office

— exceeding the record of any other president.

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Other than humans, black lemurs are the only

primates that may have blue eyes.

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Sheriff came from Shire Reeve.

During early years of feudal rule in England,

each shire had a reeve who was the law for that shire.

When the term was brought to the United States

it was shortned to Sheriff.

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Iowa has more independent telephone companies

than any other state.

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Murphy’s Oil Soap is the chemical most

commonly used to clean elephants.

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Artist Constantino Brumidi

fell from the dome of the U.S. Capitol

while painting a mural around the rim.

He died four months later.

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There were no squirrels on Nantucket until 1989.

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Blueberry Jelly Bellies were created

especially for Ronald Reagan.

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Cathy Rigby is the only woman

to pose nude for Sports Illustrated.

(August 1972)

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