Congress, the U.S. Department of the Treasury (“Treasury”), and countless legislators have criticized corporate inversions — mergers designed to help American companies lower their tax bills by moving overseas — since McDermott International completed the first one in 1982. Nearly 59 percent of registered voters across the country believe it is Congress’ duty to stop such deals, according to a 2015 study, but about 35 years after the first one, little progress has been made. Every law against these transactions is met with a creative way around it. In other words, when Congress and the Treasury close one loophole, another opens up, perpetuating the cat and mouse game between the U.S. government and corporate taxpayers. And the bottom line is often very simple: As long as companies receive a benefit of some sort from completing an inversion, they will find ways around any legislation designed to stop it. As of 2015, over 60 companies had changed their places of incorporation to a jurisdiction outside the United States. It is safe to say that each of these corporations was able to achieve at least one significant economic and business benefit as a result of completing the inversion.

In a recent study of more than 60 corporate inversions, I found that, 12 U.S. companies moved to Ireland, eight moved to Canada, seven moved to England, five moved to the Netherlands, and three moved to Switzerland. In other words, more than 30 corporations moved to countries that offered them strong economic and business incentives, and did not invert to one of the so-called exotic tax havens. This suggests that we should not focus on closing loopholes in the Internal Revenue Code, but on, first, creating a better business environment for corporations tempted to invert and, second, dealing with corporations that have already inverted to other jurisdictions: Should they be penalized or lured back to the U.S. with incentives?

To address the first point, Congress and the rest of us should examine what corporations were able to achieve after they completed an inversion. I found that they reduced their effective tax rates significantly, from an average of 20.35 percent to an average of less than 6 percent. This is an incentive that any corporation would have a hard time ignoring. What’s more, the average fair market value of these corporations after the inversion was more than three times higher than it was prior to the inversion. Another interesting factor is that corporations that inverted saw a more than 50 percent increase in their workforce, a clear benefit of inversions from a policy point of view. The trick would be for Congress to help companies achieve that level of growth without an inversion.

As for the second point, the best approach to companies that have already inverted isn’t clear. A recent study, however, shows that corporate inversions created approximately $80 million in capital gains for U.S. shareholders and annual increases in dividends of almost $10 million, suggesting these transactions may have increased U.S. tax revenue. If that’s true, then cooperating with already inverted corporations on how to bring them back could be a better approach than punishing them. That would require figuring out why these corporations chose to leave the United States and what was attractive about their destinations.

In any event, it is clear that inversions are here to stay, at least in the near-term. Even in the face of anti-inversion legislation, corporations will continue to pursue these transactions. It may, therefore, be more useful for both Congress and the Treasury to focus on other matters and stop wasting time and effort simply calling for an end to inversions. Meanwhile, perhaps in-depth analysis of the phenomenon will result in a more constructive and effective change, one that will convince corporations that they can get the benefits of inversion without leaving the country.

This post comes to us from Professor Doron Narotzki at the University of Akron’s George W. Daverio School of Accountancy. It is based on his recent article, “Targeting Corporate Inversions — Are We Doing the Right Thing?” available here.