Hog Wash

I’ve been laying low on the inversion issue that pops up from time to time when global firms make a deal to merge—such as the big daddies Johnson Controls and Tyco International, who are set to become the latest American company to move abroad in search of tax savings. Inversions let US companies lower their tax rates over time by giving them ways to shift profit out of the US and move cash easily from low-tax jurisdictions back to shareholders.

According to an article in the Wall Street Journal, the merger, the first big deal of 2016 underscores the snowball effect of inversions. As deals like Johnson Controls and Tyco happen in a particular industry, they enable more—and bigger—companies to follow suit because US rules require foreign targets to be of a certain size relative to their buyers. In this distressing election season, the political rhetoric is going to reach a fever pitch over the inversion issue.