What is the purpose of a company?
I find myself asking that question in light of the ongoing debate triggered by Walgreens, a long-time Illinois company, contemplating moving its corporate headquarters to Switzerland.
The move would help Walgreens reduce its federal tax burden, now estimated at about 31 percent. Cutting that expense seems like a good economic move — a no brainer.
But the move would also hurt Illinois, by taking money and jobs out of the public domain.
So critics claim Walgreens is being a bad corporate citizen, almost unpatriotic, by trying to shed some tax costs.
But is it really?
Getting out of paying taxes is something every American does nearly every day.
People buy products on the Internet and brag about paying no taxes. Up where I live, near the Wisconsin border, many of my neighbors brag about how much money they save by shopping for groceries at a Wisconsin store called Woodman’s. How do they do it? Wisconsin does not charge sales tax on food.
And every April 15, taxpayers either celebrate how much they are getting back from Uncle Sam, or bemoan how much they have to pay.
There may not by anything more American than trying to avoid paying taxes. We revolted from a perfectly good empire to get out of taxes back in 1776.
So if paying taxes is the measure of responsible citizenship, as some like Sen. Dick Durbin claims, then we all fall short.
But back to my initial question: What is the purpose of a business?
A business has one responsibility, and that one thing is to make money.
That’s it. Nothing else.
Once you understand that concept, it is easy to see that Walgreens would be doing the most responsible thing by saving costs. If they make more money, they could build more stores and hire more people and provide more profit to its shareholders.
And if you have an IRA or a 401K or are invested in a money market fund, or have a pension that invests in publicly traded companies, and that is just about everybody, then you want Walgreens to make as much money as possible. A well-funded retirement account is preferable to food stamps.
When you think about it, the problem isn’t that Walgreens wants to move to avoid taxes.
It’s not a problem that many of my neighbors shop in Wisconsin for groceries. It is not a problem that people flock to the Internet to make purchases. It’s not even a problem that everyone looks for ways to get more money back on April 15.
The problem is government spending at a rate that makes ever-increasing, confiscatory tax rates necessary. It is a cycle, if taken to its natural conclusion, is not sustainable for it will result in tax rates no one can bear or inflation that will wipe out the economy.
Congress created the problem. Since Congress won’t fix it, citizens do what they can on their own.