By Porter Stansberry in the S&A Digest:

It should have been a wonderful weekend for financial news. The Berkshire Hathaway annual meeting was last weekend. It's the "Woodstock" of capitalism. It's a time to celebrate the wonder of American capitalism... and the American way of life. Or maybe not. OBAMA! picked last weekend to announce new taxes on America's best companies.

OBAMA! says it's time for U.S. corporations to pay their "fair" share of America's taxes. To that end, he is moving to close tax loopholes that permit multinational corporations headquartered in the U.S. to keep their foreign earnings offshore and untaxed. I'll spare you the details... but the net result is easy to understand: the largest tax increase on U.S. corporations since 1986.

The move will surely play well to OBAMA!'s fans, who sincerely believe giving the government more resources will make our country a better place. It doesn't occur to these people that any lasting reduction to a corporation's global profitability will injure the company's shareholders. It also doesn't seem to occur to these folks that for many large multinational companies, their foreign earnings are larger than their U.S. earnings. Paying U.S. taxes on a business you own in China or India doesn't make much sense.
Why keep your headquarters in America, when most of your business is overseas?

I find the situation darkly ironic... America is the only developed nation in the world that taxes its citizens on their worldwide income. America is also the only developed nation in the world with a punitive "exit" tax. (The "Heroes Act" of 2008 requires anyone emigrating from America to pay the full value of their estate taxes before they leave.)

Rather than reversing the policy of taxing people on their worldwide income, OBAMA! plans to eliminate the multinational's "unfair" tax advantage by requiring them to follow the same global taxation rules individuals must follow. These policies are a kind of modern Berlin Wall: They prevent any sensible wealthy person from coming to America. And they attempt to prevent any sensible wealthy American from leaving. Unfortunately, history clearly shows attempts to "trap" the wealthy don't work. And the more antagonistic the government becomes toward the rich, the faster a country slides into poverty. America is becoming a kind of roach motel for the rich. That's a big mistake. You can shear a sheep year after year. But you can only skin it once.

When you think about taxes, remember this: Whatever their form, taxes are a drain of resources and a burden on the productive sectors of the economy. Increasing taxes on the rich, corporations, and coal users may be politically popular - but they won't make America a better place.

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