US corporate income is taxed at the highest rate in the world. “Inversion” is the process of American companies packing up, usually through merger with foreign entities, and reincorporating (if not physically relocating) in a foreign country in order to avoid US corporate income taxes.

Treasury Secretary Jacob Lew wants the inversions stopped. Writing to the Senate and House tax-writing committees, he said he said those two bodies “should enact legislation immediately…to shut down this abuse of our tax system.”

His letter went on:

What we need as a nation is a new sense of economic patriotism, where we all rise or fall together. We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.

Prior to that,

the Obama administration in its budget…proposed tightening the rules to substantially limit inversions.

Of course, it’s utterly inconceivable to this administration that the abuse is our tax system itself. It’s utterly inconceivable to this administration that what is patriotic is lowering tax rates.

More fully, and contrary to the nonsense Lew is spouting, the proper tax action for preventing inversions is to lower corporate income, and related, taxes so as to remove the incentive to go overseas in the first place. Lowering the current rate to 20% would be a good start, especially if done with a view to eliminating corporate income, and related, taxes altogether in just a couple more years.

I’ll ignore, for now, the New Nationalism, Teddy Roosevelt Progressivism in Lew’s letter.

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