David is right. Surely, the anti-tax-shelter rhetoric of the Obama administration provides the final incentive for former U.S. companies incorporated abroad to never return to the U.S.

But it will get worse. Obama’s international tax policy will not only stop foreign companies from incorporating in America, but it will also force some U.S. companies to leave the U.S., following the steps of Accenture and many others. The “loopholes” that righteous Obama is targeting are what corporate executives consider to be life-saving features of an otherwise punishing U.S. corporate tax code: permission to indefinitely defer paying U.S. taxes on income earned overseas and the “check-the-box” rules which give companies some latitude in deciding where exactly their subsidiaries should be taxed.

Those rules are here for a reason. For years, rather than do the right thing and reform the corporate income tax, lawmakers put these rules in place so U.S. companies could compete with foreign companies. In other words, they reduce tremendously the cost of doing business abroad. There is no doubt that they have encouraged companies to place their offshore subsidiaries in low-tax haven countries, but that’s because companies can’t afford not to do it.

The corporate tax is a nightmare. First, the rate is too high. Today, the rate (federal plus state) of 40 percent is the second highest in the 30-country Organization for Economic Cooperation and Development (OECD).

Second, the United States taxes corporations on their worldwide income. That means, for example, that the profits of a U.S.-owned computer plant are subject to U.S. tax whether the plant is located in Texas or Ireland. Most other major countries do not tax foreign business income as aggressively as does the United States. In fact, about half of the OECD nations have “territorial” tax systems that tax firms on domestic income only. The combination of high rate and a worldwide system makes the U.S. corporate tax system extremely punishing.

I never understood why the Bush administration didn’t reform it. Conservative economists have long been asking for it (check out their work on the subject here). But at least the Bush administration never threatened to make it unbearable for U.S. firms to do business abroad.

Finally, years ago I wrote this short paper explaining corporate inversion. It’s only going to get worse.