The Futility of Walls: How Traveling Corporations Threaten State Sovereignty

Article by Darren Rosenblum

Inversions—mergers in which one firm merges with another abroad to avoid taxes in its home country—have spread as globalization has reduced many of the transactional costs associated with relocating.  As firms acquire the power to choose the laws that govern them, they challenge the sovereignty of nation-states, who find their ability to tax and regulate firms depleted.  States and firms compete in a game of cat and mouse to adapt to this new global reality.  The subversion of state power by these firms reveals the futility of walls, both literal and regulatory.  This Essay describes the phenomenon of these “traveling corporations” and analyzes several remedies that could limit future mergers.  We conclude by arguing that inversions provoke deglobalization and yet may continue to flourish despite it as firms take the lead in dictating global norms.


About the Author

Darren Rosenblum: Professor of Law, Elisabeth Haub School of Law, Pace University.

Citation

93 Tul. L. Rev. 645 (2019)