Past and a Present Secret of the Waldorf Astoria

More than once I personally was an overnight guest at the Waldorf Astoria and it is a tradition to visit the famous hotel when visiting New York. The hotel holds many secrets and some fascinating facts.

It’s Called the Presidential Suite for a Reason
It’s not the finest suite in the city or even at the Waldorf Astoria, but unique amenities like multiple adjacent rooms for staff, bulletproof glass windows, and an interior design similar to the White House make this grand accommodation high up on the 35th floor the number one choice of sitting presidents when they visit New York. Every president since Herbert Hoover has stayed here, including President Obama, who sleeps here every time he’s in town. Each president has also left the hotel a gift that is now featured in the suite (JFK left a rocking chair), so check back in a couple years to see what Obama leaves.

Famous Faces Moving In
There have been several notable Americans to call the hotel home over the years including Herbert Hoover (after his presidency), Cole Porter, Grace Kelly, Frank Sinatra and three five-star generals (MacArthur, Eisenhower & Bradley). These guests didn’t just book a room or suite for the weekend. They rented one-of-a-kind apartments. There are several residential units in the hotel, located on the 28th to 42nd floors known as the Waldorf Towers. These are some of New York’s most desired homes, the smallest coming it at 1,600 square feet and many with a private terrace. All include 24-hour maid service, a private entrance and sky high price tags—some of these rent for upwards of $100,000 per month.

***But there is more.

A secretive U.S. government agency has cleared the way for a giant Chinese insurance firm to buy New York’s fabled Waldorf Astoria after a national security review that likely imposed conditions on the purchase.

Anbang Insurance Group Co. in Beijing announced the blockbuster deal. Hilton Worldwide, which sold the iconic hotel for $1.95 billion, confirmed its approval but declined to comment. The sale is expected to close on March 31.

“At this point, Anbang Insurance Group’s acquisition of the Waldorf Astoria hotel in New York has formally completed all the relevant procedures,” the Chinese conglomerate said in a statement.

The deal’s approval represents a precedent-setting action by the Committee for Foreign Investment in the United States as it moves to vet major real estate transactions for national security implications.

In the past, the focus of the panel known by its acronym CFIUS has been on protecting foreigners’ access to sensitive data, classified information and high-tech equipment through purchases of American firms, many of which were government contractors.

The panel took up the Waldorf Astoria sale because the hotel serves as the home-away-from-home for presidents visiting New York and provides a residence for the U.S. ambassador to the United Nations, currently Samantha Power. Foreign dignitaries and celebrities also stay at the Art Deco landmark. Christopher Brewster, a Washington lawyer with Stroock & Stroock and Lavan who represents Chinese and other foreign businesses seeking to buy American companies, said CFIUS all but certainly would have required key mitigation measures in order to sanction the Waldorf Astoria deal.

“There would need to be certain protections put in place to ensure the integrity of the telecommunications systems used by the U.S. ambassador to the U.N. and to ensure that there is adequate physical security,” Brewster told McClatchy on Tuesday.

“There could very well be restrictions on access to the hotel by the foreign owners, restrictions on the staffing of certain positions and other management controls,” Brewster said.

It is even possible, Brewster said, that CFIUS required day-to-day management of the hotel to be limited to American citizens, perhaps under the oversight of a top boss vetted by the secretive agency.

“The idea that CFIUS would clear this transaction and then just walk away from it seems to me far-fetched,” Brewster said. “I have to believe that they required some kind of protections to be put in place.”

The original sales agreement granted Hilton management rights at the Waldorf Astoria for 100 years.

After controversial purchases of American properties in the 1970s by Japanese and Arab firms, President Gerald Ford established CFIUS in 1976 via executive order, and Congress later codified it into law.

The committee, whose work is classified, does not comment on its cases. It is chaired by the Treasury secretary, who is joined by the secretaries of Homeland Security, Commerce, Defense, State and Energy, along with the Attorney General. The U.S. trade representative and the head of the Office of Science and Technology Policy also belong.

As China in recent years has surged to the front of countries with foreign firms buying American companies, CFIUS has focused increased attention to some of its acquisitions.

After a lengthy review, CFIUS in September 2013 approved the purchase of Smithfield Foods Inc., the world’s largest pork producer, to Hong Kong-based Shuanghui International Holdings.

“A lot of people were laughing at the idea of CFIUS reviewing pig farms,” Brewster said Tuesday. “But the food supply has been recognized as part of the critical infrastructure of the United States. Smithfield plays a major role in the U.S. food sector, feeding our troops and supplying commissaries.”

In a more contentious case, CFIUS in 2012 denied the bid by Chinese-owned Ralls Corp. to buy a group of wind farms in Oregon, saying they were too close to a major U.S. naval base. After President Barack Obama rejected Ralls’ appeal of the decision, the Chinese firm sued him and CFIUS. A federal court last year ruled that Ralls’ constitutional due process rights had been violated and ordered the U.S. government to provide the company hundreds of previously concealed documents supporting its denial of the deal.

The 47-story Waldorf was the world’s biggest hotel when built in 1931 at its current location on New York’s Park Avenue between East 49th and East 50th Streets, about 10 blocks from the Grand Central train station.

An underground train transports presidents and other dignitaries from Grand Central to the Waldorf, carrying Secret Service limousines and other security vehicles.

Every White House occupant since Herbert Hoover has stayed in the hotel’s Presidential Suite on the 35th floor, with each U.S. leader leaving a gift.

Frank Sinatra, Cole Porter, Grace Kelly and Gen. Douglas MacArthur are among the many celebrities who’ve lived in the Waldorf’s palatial rooms and apartments, which feature around-the-clock food delivery and maid service.

Aaron Radelet, Hilton’s vice president for corporate communications, told McClatchy in October, when the Anbang purchase was first announced, that the iconic property would “undergo a major renovation” as part of the deal.

As China has quietly increased its investment in the United States, Beijing and Washington have engaged in more public political spats around accusations of spying and computer hacking.

In its most recent annual report to Congress, CFIUS disclosed that in 2012, for the first time, it had done more national security reviews of transactions involving China than of those involving any other country.

 

Defense Intelligence Agency on Global Threats

Worldwide Threat Scope, Complexity on the Rise

Taken in aggregate, recent political, military, social and technological developments have created security challenges more diverse and complex than any the nation has ever experienced, Marine Corps Lt. Gen. Vincent R. Stewart, director of the Defense Intelligence Agency, told Congress Feb. 3.

Testifying before the House Armed Services Committee on the subject of worldwide threats, Stewart was joined by Army Lt. Gen. William Mayville, Joint Staff director for operations, and Mark S. Chandler, acting director for intelligence for the Joint Staff.

“Our challenges range from highly capable near-peer competitors, to empowered individuals with nefarious intentions. Increasing demands, coupled with today’s challenging fiscal environment, have stressed our defense intelligence establishments and forced us to accept greater risk,” Stewart said.

The existing strategic environment isn’t going away any time soon, he said.

The increasing scope, volatility and complexity of threats are “the new normal,” Stewart said.

The Defense Intelligence Agency is focused on three areas of special concern, the general said.

Military Competitors

“Capable military competitors — Russian military activity, for example — [are] at historically high levels,” he said. “Moscow is pursuing aggressive foreign and defense policies, including conducting destabilizing operations in the Ukraine, conducting a record number of out of area naval operations and increasing its long-range aviation patrols.

“In addition,” Stewart continued, “Beijing is focused on building a modern military capable of achieving success on a 21st century battlefield and advancing its core interests — which include maintaining its sovereignty, protecting its territorial integrity and projecting its regional influence.”

Breakdown of Law and Order

Vulnerable and ungoverned territory is on the rise due to the erosion of moderate and secular Islamic states, Stewart said.

“While coalition strikes have degraded [the Islamic State of Iraq and the Levant’s] ability to operate openly in Iraq and Syria, the group retains the ability to conduct limited offensive operations and is seeking to expand its presence and influence beyond these two countries,” he said. “Governments in countries such as Egypt, Algeria, Jordan and Lebanon are under stress from a variety of sources, thereby reducing their capability as a region to confront the threat posed by violent extremists.”

And the breakdown of order in Syria, Yemen, Iraq, Libya and northern Nigeria has created “fertile spawning grounds” for terrorist organizations with far-reaching influence, the general said.

Space, Cyber Threats

The space and cyber domains are increasingly threatened, he said. Russia and China are recognizing the strategic value of space and are focusing on diminishing the advantages held by the U.S. and its allies.

“Both countries are conducting anti-satellite research and developing anti-satellite weapons, with the intent of denying the U.S. the use of space in the event of conflict,” Stewart said.

For the Defense Department, the cyber threat is particularly alarming because of the interconnected nature of weapons, communications and networks, he said.

“At low cost, with limited technical expertise, our adversaries have the potential to cause severe damage and disruption to U.S. systems, leaving little or no footprint behind,” the general said. And the speed and influence of mobile communications and social media have the potential to magnify international crises and shorten an already compressed decision-making cycle, Stewart added.

Sequestration

The demand for intelligence has never been greater, he said, but sequestration and operational demands have forced the military intelligence community to accept increased risk.

This “will have a direct and lasting impact on our ability to provide high-quality, nuanced intelligence required by policy makers and war fighters. I fear that the true cost of these difficult choices today may be paid on the battlefield of the future,” the general said.

*** Is war between Hezbollah and Israel inevitable?

The delicate status quo, which has ensured peace between Hezbollah and Israel since the 2006 war, is rapidly unravelling. After that war, both Hezbollah and Israel subscribed to a deterrence theory, which stood the test of time. Until two weeks ago.

Now, tensions between the two sides are at their highest since the last ceasefire. Indeed, Israeli Foreign Minister Avigdor Lieberman said on Monday that a third Lebanon war is now inevitable.

On Jan. 18, an Israeli helicopter gunship hit a convoy of vehicles in the Syrian province of Quneitra. The attack killed six Hezbollah operatives, one of whom was Jihad Mughniyeh, the son of Imad Mughniyeh, who was assassinated by Israel in an operation involving the Israeli Mossad and the CIA, as the Washington Post revealed last week.

The hope on the Israeli side must have been that Hezbollah would not seek immediate retaliation for the Jan. 18 attack. It was not to be. On Jan. 28, Hezbollah attacked an Israeli convoy in broad daylight in the Shebaa Farms, an area long occupied by Israel but claimed by Lebanon. Two Israelis were killed, a major and a sergeant of the Israel Defence Forces.

This escalation is happening at a time of important shifts in the relationship between Iran, Hezbollah and Israel.

One development, of concern to Israel, is the deepening of relations between Hezbollah and Iran in recent weeks. One day before Hezbollah’s attack on Israeli forces, Hezbollah’s leader, Sayyed Hassan Nasrallah, met with the Iranian Major General Qasem Suleimani, the legendary commander of the Iranian al-Quds force of the Islamic Revolutionary Guards Corps. Although the two men had met many times before, this is the first known meeting in Lebanon that has been publicized.

The meeting was all the more remarkable because of the publicity given to it. Suleimani paid respects to Hezbollah fighters killed by Israel and also visited the grave of Jihad Mughniyeh.

Hezbollah has also declared, in a recent statement, that it no longer recognizes the rules of engagement with Israel that were mediated, on an informal basis, by the United Nations in order to prevent clashes. Hezbollah’s declaration is a tacit rejection of the de facto understanding between the two bitter foes that has existed for years and has, up until now, ensured peace.

In a defiant statement after Hezbollah’s attack, Nasrallah reiterated Hezbollah’s rejection of previous the rules defining Hezbollah’s policy towards Israel. It was this status quo that had, for example, allowed for the group to negotiate a swap of its prisoners in exchange for Israeli war dead in 2008. In a clear departure from the past, where Hezbollah would not take revenge on Israeli attacks, Nasrallah stressed that the group has the right to respond in any way or time it deems fit.

“If Israel is banking that we fear war, then I tell it that we do not fear war and we will not hesitate in waging it if it is imposed on us,” he continued. “We did not hesitate in making the decision that Israel should be punished for its crime in Quneitra even if it meant going to an all-out war,” he revealed, an admission he may regret.

“The Israeli people discovered that their leadership put them on the brink of war, jeopardizing their economy and security,” he added in the wake of the operation. “Israel learned that it should not test us again given the Quneitra strike and Shebaa Farms operation,” he warned.

Not surprisingly these are not the conclusions that Israeli Prime Minister Benjamin Netanyahu’s government in Jerusalem are likely to draw.

There has been a dangerous deterioration in Israel’s strategic position because of the open boast by Nasrallah that it is now fighting Israel not only from the Blue Line with Lebanon, but, also, on Syria’s frontline with Israel in the Golan. In other words, Hezbollah’s front with Israel now extends from the Mediterranean all the way to the disputed Golan on the Syrian border. Israel is unlikely to leave a threat like that unanswered. Moreover, Israel never shrinks from retaliation when its soldiers are killed, and especially when one of them is a middle-ranking officer.

But the strategic options before Netanyahu are limited. A further strike at Hezbollah will lead to a major war that would probably eclipse that of 2006 in its severity. Moreover, the prime minister will be conscious of the fact that elections are to be held in Israel on March 17. He may not want become embroiled in a war right now for that reason.

Despite these difficulties, some new realities would work in Israel’s favor. Netanyahu knows that, unlike during the 2006 war, Hezbollah would not find much support from the Arab world in the eventuality of a conflict with Israel. Deep sectarianism between Sunni and Shi’ites across the region means that few Arab states would be upset today by an Israeli offensive against Hezbollah, the stalwart defender of the hated Assad regime.

Hezbollah, in other words, is playing a dangerous game. It may yet find itself wishing to return to the days of stability and peace, which it is abandoning with such troubling rapidity.

 

CENTCOM Victim of CyberCaliphate

An unknown network of hackers that are sympathizers of Islamic State hacked CENTCOM’s twitter account and the associated YouTube channel.  So far the response is ‘it does not appear to be anything problematic’. Ah what…problematic? The hackers had some success that for sure is problematic and what is more, data breaches of any sort does not provide anyone in America with internet security confidence.

There is a ‘cybercaliphate’ that no one is admitting.

A screenshot shows the U.S. Central Command Twitter account after it was apparently hacked by people claiming to be aligned with Islamic State militants. The account was shortly thereafter suspended.  

A screenshot shows the U.S. Central Command Twitter account after it was apparently hacked by people claiming to be aligned with Islamic State militants. The account was shortly thereafter suspended. Reuters

WASHINGTON—Hackers claiming to be aligned with Islamic State militants took control of the U.S. Central Command’s Twitter and YouTube accounts Monday, posting phone numbers of top military officers and what they said was classified documents.

In the posting, the militants claimed they were working for the Islamic State and a “Cyber Caliphate.”

A Pentagon official said that U.S. Central Command was aware of the hack but had no immediate information about how it occurred.

Officials for a time Monday appeared to be trying to retake control of the Twitter account. Shortly after the first tweets from the hackers appeared, the “Cyber Caliphate” logo and slogan disappeared, replaced by a blue square.

Then shortly after 1 p.m., the Twitter account was labeled as suspended. Moments later, the Central Command’s YouTube account apparently was suspended.

“We can confirm that the U.S. Central Command Twitter and YouTube accounts were compromised earlier today,” said a defense official. “We are taking appropriate measures to address the matter. I have no further information to provide at this time.”

The White House said it was looking into the hack, but had little information and played down the significance of the intrusion.

“There is a significant difference between…a large data breach and the hacking of a Twitter account,” said Josh Earnest, the White House press secretary.

The tweets posted by the hackers included phone number of top military commanders and what the group said were military scenarios for a conflict with North Korea and China.

A senior Pentagon official said the information posted by the hackers on the Twitter account didn’t appear to be highly classified documents.

“It does not appear to be anything problematic,” the official said.

–Felicia Schwartz and Carol E. Lee contributed to this article.

Write to Julian E. Barnes at julian.barnes@wsj.com

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WASHINGTON—Hackers claiming to be aligned with Islamic State militants took control of the U.S. Central Command’s Twitter and YouTube accounts Monday, posting phone numbers of top military officers and what they said was classified documents.

In the posting, the militants claimed they were working for the Islamic State and a “Cyber Caliphate.”

A Pentagon official said that U.S. Central Command was aware of the hack but had no immediate information about how it occurred.

Officials for a time Monday appeared to be trying to retake control of the Twitter account. Shortly after the first tweets from the hackers appeared, the “Cyber Caliphate” logo and slogan disappeared, replaced by a blue square.

Then shortly after 1 p.m., the Twitter account was labeled as suspended. Moments later, the Central Command’s YouTube account apparently was suspended.

“We can confirm that the U.S. Central Command Twitter and YouTube accounts were compromised earlier today,” said a defense official. “We are taking appropriate measures to address the matter. I have no further information to provide at this time.”

The White House said it was looking into the hack, but had little information and played down the significance of the intrusion.

“There is a significant difference between…a large data breach and the hacking of a Twitter account,” said Josh Earnest, the White House press secretary.

The tweets posted by the hackers included phone number of top military commanders and what the group said were military scenarios for a conflict with North Korea and China.

A senior Pentagon official said the information posted by the hackers on the Twitter account didn’t appear to be highly classified documents.

“It does not appear to be anything problematic,” the official said.

–Felicia Schwartz and Carol E. Lee contributed to this article.

Write to Julian E. Barnes at julian.barnes@wsj.com

Who is Funding the Leftists in Latin America?

It has been proven that the Soviet KGB funded terror and operations against the West.

Now we have China doing the same thing in the Western hemisphere.

China Boosts Support for Latin Leftists

China Pledged Billions of Dollars of Financing to Venezuela and Ecuador, Two South American Energy Exporters Battered by Falling Oil Prices

China pledged billions of dollars of financing to Venezuela and Ecuador, two South American energy exporters battered by falling oil prices, as Beijing moved to secure resources and allies in the region.

China has increased its diplomatic clout throughout Latin America by extending over $100 billion in credit to the region since 2005, according to figures from Boston University’s Global Economic Governance Initiative.

Beijing has become the biggest foreign financier of both Venezuela and Ecuador, two oil-rich, leftist allies eager to help counter U.S. sway in the region.

Following a meeting with Chinese President Xi Jinping , his Venezuelan counterpart Nicolás Maduro announced bilateral accords that would bring $20 billion in new investment to Venezuela. Ecuador said it secured $7.5 billion in financing.

Both Mr. Maduro and his Ecuadorian counterpart, Rafael Correa, were in Beijing along with officials from various Latin American nations to take part in a regional gathering.

Both Latin countries, highly dependent on oil exports to pay for heavy public spending, were in dire need of a helping hand as crude prices tumble to less than half of their level from several months ago. A barrel of oil sold for about $50 on Wednesday.

Last week, Venezuela’s central bank released long-delayed figures, revealing the country entered a recession in 2014.

Venezuela needs oil to average around $117.50 a barrel to balance its 2015 budget, according to Deutsche Bank estimates.

In Ecuador, officials have reported a slowing economy, with growth of 3.4% in the third quarter, down from 5.6% in the July-through-September period in 2013.

Mr. Maduro, who has seen his approval rating swoon along with oil prices, offered few details on the new accords with China, which he said involved projects in the energy, industrial and housing sectors.

The Venezuelan leader, who has struggled to keep supporters happy amid shortages of basic goods, praised China for coming to the rescue.

“The economic war against our people and the oil price war is an opportunity to grow closer to our allies,” said Mr. Maduro, who has blamed Venezuela’s spiraling economy on an alleged plot by enemies of his leftist government.

Venezuela is slated to hold hotly contested legislative elections in December that many analysts see as a referendum on Mr. Maduro’s performance.

At a daily press briefing on Wednesday, Chinese Foreign Ministry spokesman Hong Lei said “Relevant financing cooperation is going smoothly” with Venezuela. State-run China Central Television paraphrased Chinese President Xi Jinping as calling for “promoting oil development” in a meeting with Mr. Maduro.

Experts said it was unclear without further details what kind of impact the new financing would have on the Venezuelan and Ecuadorian economies.

China has extended to Caracas some $50 billion in credit since 2007 in exchange for guaranteed oil. It has committed more than $12 billion in financing to Ecuador between 2009 and 2014.

Wednesday’s agreement underscored China’s continuing support for Mr. Maduro despite his political woes, said Risa Grais Targow, senior Latin America analysts for Eurasia Group.

“This is because the Chinese are heavily exposed to Venezuela and are likely concerned about the prospect of regime change,” she said in a client note.

China-Latin America Finance Database

Since 2005, China has provided upwards of $87 billion in loan commitments to Latin American countries. China’s loan commitments of $37 billion in 2010 were more than those of the World Bank, Inter-American Development Bank, and U.S. Export-Import Bank combined. This interactive database provides up-to-date information on Chinese lending in Latin America by country, lender, sector and year.

This database stems from a collaborative project by Boston University’s Global Economic Governance Initiative and Tufts University’s Global Development and Environment Institute. The resulting Inter-American Dialogue publication, The New Banks in Town: Chinese Finance in Latin America, by Kevin Gallagher, Amos Irwin, and Katherine Koleski is the main source of featured data and conclusions. Loan data is updated on an annual basis.

Taxes Driving U.S. Corporations to Shutter

No wants to change the tax code and no one wants to allow U.S. currency offshore to be repatriated so…

U.S. Stands to Lose Billions From Corporate Tax Inversions

One Estimate Puts Lost Tax Revenue at Close to $20 Billion Over a Decade

How much revenue does the U.S. Treasury stand to lose from corporate tax inversions? It is difficult to say precisely, but one estimate puts the figure at close to $20 billion. Calculating how much the U.S. Treasury would lose is nearly impossible because of a dearth of reliable tax data from companies’ public filings and the variables in how companies can structure their businesses, tax experts say. One way companies seek to reduce their U.S. tax bills by reincorporating overseas is to transfer pretax income from their U.S. operations to their foreign parent companies through intercompany debt, says corporate tax consultant Robert Willens. But it is difficult to know how large of an impact that will have for a given company because of limits on how much interest companies can deduct from their taxable income. There is also a risk that companies act too aggressively attract scrutiny from the Internal Revenue Service. Another variable is the cash many companies keep overseas to avoid U.S. taxes. The cash only becomes taxable once it is brought back to the U.S. to pay dividends to shareholders or is used for other purposes. But companies don’t always disclose how much cash they bring back home or when.

Some companies say they were never going to repatriate the cash anyway, so they aren’t depriving the U.S. tax base of revenue by moving out of the country. Report: 1 million corporations closed, 60,000 a year; taxes blamed America has lost 1 million corporations since their height during the Reagan era, in part driven out of business by the industrialized world’s highest corporate tax rate, according to a new report from the nonpartisan Tax Foundation. The just-issued research revealed that the number of traditional “C” corporations has fall to a “historically low level” and wiped out the corporate tax base, resulting in the federal government relying much more on individual income taxes to fund its operation. “There is now more net business income taxed under the individual income tax system than the traditional corporate tax code, a trend that does not appear to be stopping any time soon,” said the report provided to Secrets. It said that corporate closings have recently picked up steam and now 60,000 a year are shut down. A driver in the loss of traditional corporations has been the ever-rising corporate tax rate, an issue Washington has been ducking for years. The Tax Foundation said that many corporate titans have taken matters into their own hands by restructuring as “pass through” operations which allows profits to be taxed at lower individual rates. “More than 60 percent of U.S. business profits are now taxed under the individual income tax code rather than the corporate tax code, which explains why the U.S. collects a relatively small amount of tax revenue from corporations despite having the developed world’s highest corporate tax rate,” said the foundation. “Although this kind of do-it-yourself tax reform is beneficial to the overall economy because it lowers the tax burden on business investment, something is nevertheless lost,” said Tax Foundation Chief Economist William McBride in a statement. “Pass-through businesses do not offer the same ability to invite investment from thousands of shareholders or easily transfer shares. That means the decline of the traditional corporate sector represents an economic distortion that is hobbling American industrial capacity and job growth. No other developed country has such a distorted business sector,” he added.

Report: 1 million corporations closed, 60,000 a year; taxes blamed

America has lost 1 million corporations since their height during the Reagan era, in part driven out of business by the industrialized world’s highest corporate tax rate, according to a new report from the nonpartisan Tax Foundation.

The just-issued research revealed that the number of traditional “C” corporations has fall to a “historically low level” and wiped out the corporate tax base, resulting in the federal government relying much more on individual income taxes to fund its operation.

“There is now more net business income taxed under the individual income tax system than the traditional corporate tax code, a trend that does not appear to be stopping any time soon,” said the report provided to Secrets.

It said that corporate closings have recently picked up steam and now 60,000 a year are shut down.

A driver in the loss of traditional corporations has been the ever-rising corporate tax rate, an issue Washington has been ducking for years.

The Tax Foundation said that many corporate titans have taken matters into their own hands by restructuring as “pass through” operations which allows profits to be taxed at lower individual rates.

“More than 60 percent of U.S. business profits are now taxed under the individual income tax code rather than the corporate tax code, which explains why the U.S. collects a relatively small amount of tax revenue from corporations despite having the developed world’s highest corporate tax rate,” said the foundation.

“Although this kind of do-it-yourself tax reform is beneficial to the overall economy because it lowers the tax burden on business investment, something is nevertheless lost,” said Tax Foundation Chief Economist William McBride in a statement.

“Pass-through businesses do not offer the same ability to invite investment from thousands of shareholders or easily transfer shares. That means the decline of the traditional corporate sector represents an economic distortion that is hobbling American industrial capacity and job growth. No other developed country has such a distorted business sector,” he added.

Then comes Congress with threats:

The Senate’s chief tax writer, Ron Wyden, wants U.S. companies looking to move abroad for a lower tax bill to understand one thing: “[T]hey won’t profit from abandoning the U.S.”

The Democrat’s comments, made in a Wall Street Journal op-ed last week, came amidst a spate of proposed mergers between major American companies and foreign rivals that would end up in their reducing their U.S. tax bill.

The proposed merger that’s gotten the most attention of late: The so far unsuccessful bid by Pfizer (PFE) for British pharmaceutical maker AstraZeneca (AZN).

Today, a U.S. company can move to a more tax-friendly country in a process known as “inversion” if the foreign partner owns more than 20% of the stock in the merged entity, among other requirements.

Wyden wants to raise that threshold to at least 50%, and he would like to make such a provision retroactive to May 8, 2014.