Voting with Their Feet

Imagine you are the CEO of a major multinational firm. Your chief financial officer comes to you and says if you move your legal home from the United States to Bermuda the company will have a 20 percent increase in net profits. With the increased profits, the company will be able to expand production, hire more workers, do more R&D, and pay stockholders a higher dividend.

However, your VP for government relations tells you that if the company changes its legal home you, as the CEO, will be accused of being unpatriotic by some members of Congress and certain presidential candidates. Even worse, these same politicians will threaten to bar your company from obtaining U.S. government contracts, and demand that the IRS and government regulatory agencies single out your company for special scrutiny.

RR

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Richard W. Rahn

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Imagine you are the CEO of a major multinational firm. Your chief financial officer comes to you and says if you move your legal home from the United States to Bermuda the company will have a 20 percent increase in net profits. With the increased profits, the company will be able to expand production, hire more workers, do more R&D, and pay stockholders a higher dividend.

However, your VP for government relations tells you that if the company changes its legal home you, as the CEO, will be accused of being unpatriotic by some members of Congress and certain presidential candidates. Even worse, these same politicians will threaten to bar your company from obtaining U.S. government contracts, and demand that the IRS and government regulatory agencies single out your company for special scrutiny.