Yesterday evening I participated in an interesting meeting at Columbia University to talk about the efforts of the Committee on Global Thought. While the name does sound somewhat ominous (vaguely Orwellian? Stalinist?), I believe it is important to call out “global” explicitly. The three most pressing challenges of the world are global in nature: technology’s impact on the economy and society, climate change and infectious diseases. These each have wildly varying local impacts but are fundamentally global in their nature.

Reading this morning about Obama’s budget and proposed corporate tax reform was an immediate reminder of that. Companies operate globally and avail themselves of vastly different tax regimes across countries to minimize their overall tax rate. The net result has been that US companies have accumulated a vast trove of cash overseas. Apple alone has close to $150 Billion of cash overseas and in the meantime is issuing bonds in the US in order to avoid bringing that cash back (where it would be taxed).

Put differently: as technology facilitates global operations of corporations, taxation goes from a national issue to a global issue. As long as some countries offer super low or non-existent corporate tax rates, companies will figure out how to accumulate their profits there. One of the common schemes involves the transfer of intellectual property to such a country, then charging business units worldwide for the use of that IP and thus moving profits to the IP business unit (Apple does this extensively).

In the extreme, companies will decide to move their domicile entirely. This has been particularly popular recently among pharmaceutical companies. US pharmaceutical companies have been acquiring UK ones and then flipping their domicile to the UK in a trick known as “inversion.”

One way a program such as Columbia’s could have an impact is by bringing together responsible parties from across the globe on an issue such as corporate taxation, fostering a dialog, and proposing some standards that countries should adhere to. This would also be an opportunity to call on the leaders of US and multi-national companies who claim to be interested in corporate tax reform but then don’t seem to like any of the proposals.