NEW YORK (TheStreet) -- There is growing concern about corporate inversion -- when American corporations attempt to avoid U.S. tax rates, the highest in the world, by acquiring foreign companies and then relocating their headquarters overseas. The problem is that the discussion about corporate inversions is more connected with the elections this fall than it is with the tax and location issue itself.
The latest example of inversion is U.S. drug maker AbbVie (ABBV - Get Report) and its acquisition of Irish-headquartered, UK-registered Shire (SHPG). AbbVie will move its headquarters outside the U.S. to take advantage of Shire's location and tax situation.
The problem is that inversion is a real concern, but it is also seen as an effort by the White House to create a campaign issue that will help Democratic candidates in the fall.
And, with the current publicity surrounding the AbbVie transaction, among others, the heat is rising in Congress.
U.S. Treasury Secretary Jack Lew recently raised the issue of inversion and the loss of tax revenue when he sent a letter to Dave Camp, the Republican chairman of the House Ways and Means Committee, on July 15.
Democrats want to address the issue through what I see as short-term fixes. Some in Congress, like Charles Schumer of New York, want to make the tax fix retroactive to include some transactions that have already been completed.
Republicans counter by saying that there certainly is an issue here, but it should be a part of a more comprehensive tax reform. They are proposing that the new law would apply only to future acquisitions.
Analysts contend that there is very little chance that something will be passed before the elections in the fall.
Some even argue that there will not be a new law in the future. A comprehensive tax-reform package might be too complex and would not be able to sustain enough agreement to pass.
Others take the position that smaller, short-term measures need to be passed in order to do something -- anything -- about the situation.
That leaves us nowhere in terms of tax reform, yet creates a need to establish positions and talking-points for the fall elections.
Something, however, really needs to be done!
An article from the Financial Times this morning claims that "up to 25 more U.S. companies are considering relocating overseas to cut their tax bills." The argument is that this number is growing almost every day, as corporations believe that there is very little chance that the laws will be changed, so the time is ripe for further movements.
Corporations also seem to disregard the idea that the issue will have much impact on the elections this fall. The argument here is that voters do not see this as such a major issue because the companies that are impacted tend to be more "white collar," like pharmaceutical firms, not "blue collar," like car manufacturing firms.
But the issue is a real one.
Tax rates are distorting corporate decisions. They are causing companies to make relocation and buying decisions that they would not be making otherwise -- and this is not good.
When tax rates become so burdensome that the cause firms to leave their home country, something is wrong.
Corporate inversion should be an issue in the fall campaign. But it should not be an issue about how corporations, those "greedy bastards," are leaving the country and something needs to be done to force them to remain here.
The issue in the fall elections should be that politicians have raised corporate tax rates to a level that has given corporate managers very little choice but to move their headquarters to other countries. This is truly hurting America and American workers.
At the time of publication, the author held ABBV.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.