Dodger Corporation has been in the manufacturing business in the United States for more than 100 years. A tax consultant has proposed that Dodger use a “corporate inversion” to nominally move its headquarters to an island in the Atlantic Ocean. The operating headquarters will remain in the United States, along with all of its employees, its plant and equipment, and most of its customers. By undertaking this corporate inversion and technically moving its headquarters offshore, Dodger can defer or avoid paying U. S. corporate income tax. For all practical purposes, however, it remains a U. S.- based company.
a. What would you recommend Dodger do about the proposed corporate inversion?
b. What potential ethics issues do you see in this situation?