A Sept. 7 Wall Street Journal story by Josef Joffe” titled “Germany’s Boring Election is Nothing to Snore At” said, “[Friedrich] Engels famously predicted that, after the revolution, the ‘rule over men’ would be replaced by the ‘administration of things’ — by the end of politics, no less. No more ‘contradictions,’ as the Marxists have it, no class struggles or cultural wars. Just a wise bureaucracy dictating society’s traffic.”
I first became disenchanted with socialism when in high school, I wrote an essay about the Manifesto of The Communist Party by Karl Marx and Engels. I thought of myself as “born to be free” and decided that at that time I didn’t want to have anything to do with socialism, communism or progressivism.
And now, because of Sweden’s “wise bureaucracy,” the Nordea Bank will move its headquarters from Stockholm to Finland, saving as much as 1 billion euros.
The Nordea Bank is the Nordic countries’ biggest lender and does business across Norway, Sweden, Denmark and Finland. Earlier this year, Nordea said it was leaving Sweden after the government proposed increasing the fees that the bank has to pay to help the wise bureaucrats bail them out. On Sept. 6, Nordea Bank moved its headquarters to Helsinki.
The United States is not immune to these types of actions. Just look at the trillions of dollars that American industry is holding offshore because of our ridiculous tax and regulatory policies. Since 1983, over 70 major companies have moved their headquarters overseas, including the likes of Tyco, Accenture Consulting, Cooper Industries, PriceWaterhouseCoopers, Foster Wheeler, Tim Horton Inc., Herbalife Industries and Medtronics. And here’s a shocker: There are over 10,000 tax haven subsidies for the Fortune 500 corporations overseas.
You would think our wise politicians would realize that their tax policies are not only making a fortune for corporations, they are also costing America a lot of well-paid jobs. It’s time for a change. Congress is considering tax reform to reduce corporate income tax from its current 35-percent level. But will it meet the 12.5 percent rate that is being offered by other countries? Small businesses pay a much higher effective tax rate than do large corporations because a lot of them are being taxed as individuals rather than as corporations.
Now, here’s an idea for a way to make a lot of silver and gold: Let’s start a company that facilitates small businesses moving their headquarters overseas. With the e-commerce, low cost transportation and 3D printers, it would be very appealing to me to move my company to Kinsdale, Ireland, for example.
Kinsdale is one of Ireland’s tax havens, with a corporate tax rate of 12.5 percent. Kinsdale is a small hamlet of about 5,500 people. It’s located in the County of Cork. It is scenic, on the water and has a star-shaped fort. When you have visitors — either family or business — they can get a five-star hotel room for $132 night.
If I were a small manufacturer with fewer than 50 employees, I would jump at the chance to establish my business in Ireland. According to the National Association of Manufacturers, the cost of complying with regulations in the U.S. for a manufacturing company with 50 or fewer employees, is $30,000 for each and every employee on the payroll. What a ridiculous waste of resources.
I’m reminded of a friend who had to spend over a $250,000 on curbs and gutters because of a regulation. All he wanted to do was move a power pole so that he could locate it close to a new machine he had bought. His business is a junkyard located on the outskirts of North Salt Lake. This money would have been much better spent giving raises to his employees.
But moving small businesses’ headquarters overseas would not be a wise move. It would destroy America. A much wiser move would be for our politicians to come together and pass meaningful tax cuts. The small-business constituency has the political clout to make our politicians take sensible steps to improve the lives of the American citizen.
“The true sign of intelligence is not knowledge but imagination.” - Albert Einstein
Robert Pembroke is the chairman of Pembroke’s Inc. and considers himself on a permanent sabbatical. He can be reached at pembroke894@gmail.com.