Obama's primary concern is fairness:
The U.S. has “a broken tax system” that is “full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share,” Obama said as he outlined his plan with Treasury Secretary Timothy Geithner at the White House. Obama called most of the breaks “unjustifiable” and likened some company practices to a “tax scam.”
What multinationals are doing is grossly unfair. Here are but 2 enlightening facts:
- Tax havens like the Cayman Islands have “helped scores of U.S. companies, including Coca-Cola Co. and Oracle Corp., to legally avoid billions in tax payments to the U.S. government.” Companies lower their effective tax rate by more than 20 points thanks to stowing profits offshore.
- In 2004, the most recent year for which statistics are available, U.S. multinationals paid an effective U.S. tax rate of just 2.3 percent on $700 billion in foreign profits.
What do you think of this? Do you think this is fair? How would YOU like to pay a 2.3 % income tax? And Big Business is screaming this tax is too high. It's so high, they say, that multinationals will become uncompetitive and Americans will lose jobs if such a huge increase occurs.
What's most annoying to me is that members of Congress, including a few Democrats who don't want to lose election funds from top corporations, are echoing this ridiculous argument. Paying their fair share of taxes will not hurt these corporations.
Also, corporate foreign shenanigans may increase employment overseas at the expense of employment in the U.S. Yes, indeed, our current third-column tax policies encourage outsourcing. President Obama wants to bring these jobs back to the U.S. And this is the purpose of another part of his plan:
The argument against taxing corporations more is that it will damage their international competitiveness, and we’ll lose jobs and business to overseas firms. Color me skeptical. Of the $103.1 billion raised by cutting down on tax arbitrage, $74.5 billion will go to making a permanent tax credit for companies that invest in R&D in the U.S. That hardly sounds like a plan that will damage U.S. growth prospects.
NO. President Obama's plan would increase incentives for developing jobs for Americans at home. It is a win-win-win plan: good for business, good for workers, good for the economy.
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