You know something is deeply wrong in our market system when a company like Microsoft, which has $100 billion in cash sitting in bank accounts (much of it offshore), decides it needs to borrow billions to fund its acquisition of the social networking platform LinkedIn.

The deal highlights one crucial way in which our market system is no longer serving the real economy. Why would a cash-rich firm like Microsoft go into debt and cause ratings agency Moody’s to put it on a possible downgrade list? Because it will save around $9 billion in U.S. taxes by doing so. Debt is tax deductible, and borrowing will save Microsoft money relative to bringing overseas cash back home and paying the U.S. corporate tax rate on it.

There are so many dysfunctional things here, it’s hard to know where to begin. As I’ve often written, I find it rich that tech companies in particular try to avoid paying their fare share of U.S. taxes, given that the federal government funded so many of the things that make them […]