Every day in Congress, it seems, a member who created a problem demands more power and money to “solve” the resulting crisis. So it is with “tax inversions,” by which companies change their tax domicile — their country of residence, for tax purposes — to escape Washington’s clutches. Doing so deprives Uncle Sam of money to waste, which naturally drives politicians into a frenzy.

Left-wing activists tend to favor corporate taxation. They imagine a society divided between businesses and people. However, firms are owned by people, employ people, sell to people, and contract with people. Taxing companies means taxing people.

Politicians like to target business in order to disguise the incidence of taxes. At least shareholders know they are paying government twice. Employees and consumers, in particular, usually don’t know that they are earning less and paying more, respectively, because of government. In effect, everyone is taxed twice, first at the corporate level and then at the personal level.

America’s current corporate income tax rate is roughly 40 percent — it varies a bit by state and locality — and is second highest in the world. Only the United Arab Emirates is higher. Just six economic laggards — Argentina, Chad, Iraq, Malta, Sudan, and Zambia — match the federal government’s 35 percent rate. In fact, America is one of only three states in the Organisation for Economic Co-operation and Development (OECD) not to reduce rates over the last 15 years.

The US tax code includes loopholes to lower the effective burden for many companies, but trading complexity for lower effective levies is dubious policy. Virtually every other nation on earth has a lower rate. According to tax firm KPMG, the global average is 23.87 percent. Asia’s is 22.59 percent. Europe averages 20.12 percent. The tax rate for OECD countries, America’s most obvious competitors, is 24.86 percent. Several states in Europe come in at 10 to 15 points lower. The rate in Czech Republic and Hungary is 19 percent, in Switzerland 17.92 percent, in Taiwan and Singapore 17 percent, and in Ireland 12.5 percent.

The United States makes the situation worse by taxing a company’s global earnings. Most countries claim only money earned within their boundaries. Although Americans can take a credit for foreign taxes paid, most firms owe extra. Only five other OECD countries also tax worldwide income.

It should surprise no one, then, that companies seek to escape Washington’s grasp. As Judge Learned Hand, no radical libertarian, pointed out in 1934: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the Treasury.” Hand criticized the idea of “a patriotic duty to increase one’s taxes.”

Companies “avoid” taxes simply by conforming to the law as written by Congress and regulations as drafted by the IRS. A recent tool of choice has been inversions, whereby a merger moves a firm’s tax domicile overseas. Doing so actually makes it more cost-effective for companies to invest in the United States. About 50 major firms have “inverted,” more than half of those since 2008. Another 20 may be considering the idea. Among the recent controversial deals have been Liberty Global–Virgin Media, Burger King–Tim Hortons, Pfizer–Allergan, CF Industries–OCI, and Johnson Controls–Tyco Industries (British, Canadian, Irish, Dutch, and Irish partners, respectively).

High tax rates help politicians, not the country. An old-fashioned highwayman grabbed your money and went on his way. Uncle Sam seizes your cash and then uses it to boss you around in the name of helping you and everyone else. Moreover, higher corporate rates directly reduce business investment and indirectly cut consumer spending, thereby slowing job creation and economic growth.

High rates also put American enterprises at a competitive disadvantage. They can try to make do while bearing a greater burden — some simply keep their money abroad. The share of profits attributed to low-tax jurisdictions has more than doubled over the last three decades, and an estimated $2.1 billion in US multinational profits have not been repatriated. Some of that cash may be held overseas for business reasons, but avoiding high US tax rates is a powerful incentive.

Even the White House has acknowledged the problem:

Our system has one of the highest statutory tax rates among developed countries to generate about the same amount of corporate tax revenue as our developed country partners as a share of our economy; this, in turn, hurts our competitiveness in the world economy.

But, so far, the administration has done nothing to redress the situation.

The best response would be to lower corporate tax rates and adopt a “territorial” tax system, hitting only domestic earnings. Although this change would make the United States more competitive, the problem is not just tax rates. Throughout the latter half of the 20th century, America was the freest OECD nation. However, the US rating has fallen over the last decade and has dropped in every category; it is weakest on size of government, business regulation, and rule of law/​property rights. The latest Economic Freedom of the World index ranks America at only 16.

Instead, most politicians decry “economic treason” and “desertion” and want to punish American firms. It’s not the first time Uncle Sam has sought to bar the door to tax escapees. The Treasury Department has been tweaking rules since the 1990s without much success.

The Obama administration has made the issue a priority. President Barack Obama said of corporate inversion, “I don’t care if it’s legal; it’s wrong.” He called it an “unpatriotic tax loophole.”

Treasury Secretary Jack Lew denounced the lack of “economic patriotism.” His department issued rules each of the last two years in a largely unsuccessful attempt to prevent inversions, but, complained Lew, “Our actions can only slow the pace of these transactions. Only legislation can decisively stop them.” Nevertheless, he reportedly has another 150 pages worth of regulatory changes in the works. Some observers believe the administration is drawing out the process to create uncertainty in order to discourage more inversions.

These tactics create a substantial danger of unintended consequences. Inversions usually reflect a mix of motivations, of which taxes are only one. Penalizing inversions may discourage economically motivated changes. European firms worried that the 2014 regulations would cover them because of their corporate structure, even if it was not a product of an inversion. Nestle’s senior vice president of taxes, Alex Spitzer, warned that new restrictions could result in “unintended consequences, creating disincentives for inbound investment.”

Nevertheless, corporate critics are revving up their campaign. Billionaire GOP presidential candidate Donald Trump called Pfizer’s departure “disgusting.” Senate Minority Leader Harry Reid contended that Pfizer “is gaming the system and will avoid paying its fair share of US tax dollars.” Senator Bernie Sanders denounced the “corporate deserters.”

Hillary Clinton attacked the Pfizer–Allergan deal, complaining that it and other inversions will “erode our tax base” and “leave US taxpayers holding the bag.” She proposed taking “specific steps to prevent these kinds of transactions,” such as imposing an “exit tax” on firms that leave and impeding the transfer of multinational profits to US subsidiaries.

Other ideas include continuing to impose US taxes if management control remains in America; if a certain percentage of assets, employees, or sales stay here; if the new company doesn’t do substantial business in its new location; or if its foreign ownership is less than half the shares (the current rule is 20 percent) in the combined operation. Some critics have suggested taxing money earned and kept overseas, imposing higher capital gains tax rates on sale of shares in inverted companies, limiting federal contracts for “inverted” firms, organizing consumer boycotts, and criticizing low-tax nations for, as the New York Times puts it, “their beggar-thy-neighbor tax policies.”

Some politicians propose industry-specific penalties. For instance, to favor domestically produced pharmaceuticals in FDA approvals and federal purchasing, which would hurt patients. Senator Sherrod Brown (D‑Ohio) urged a boycott of Burger King. Last year, New Jersey’s legislature voted to punish inversions, which would encourage companies to shift to other states.

Washington has taken much the same approach to individuals who renounce their citizenship to avoid excessive regulations and taxes, attempting to penalize them on their way out. Nor is the US government alone in wanting to squeeze more cash out of the productive. Big-spending European states are engaged in a constant war with their lower-tax neighbors. It doesn’t matter how much governments collect from taxpayers; it never is enough.

Despite Washington’s sustained campaign to squeeze more money out of hapless taxpayers, firms have good reasons for resisting the taxman. First, the more cash they have, the better able they are to invest in both capital and labor. That means more and higher-paying jobs. Second, the more money they keep, the fewer resources politicians have to waste on pernicious purposes. That means greater liberty.

Indeed, it is the height of chutzpah for politicians to act as if providing them with money is evidence of patriotism. The real outrage is what goes on every day in Washington: essentially looting and pillaging. Politicians are greedy, stirring up envy in other people for their own advantage. In such circumstances, cutting Washington’s take is a moral imperative.

America long was known globally as a land of opportunity. Now, its government is driving the creative and productive abroad. Policymakers should acknowledge their responsibility and reform the punitive policies that are changing America for the worse.