If It Moves, Tax It!
When Obama mentioned this talking point, Romney replied, "I've been in business 25 years and I have no idea what you're talking about. Maybe I should get a new accountant."
Obama offered no defense of his statement.
But today, John Nichols over at The Nation - a far left political magazine - does.
Obama was talking about strategies for getting new revenues without raising taxes on struggling businesses: “(Part) of the way to do it is to not give tax breaks to companies that are shipping jobs overseas,” said the president. “Right now, you can actually take a deduction for moving a plant overseas. I think most Americans would say that doesn't make sense. And all that raises revenue.”
That’s not actually a debatable point. The U.S. tax code has, since the 1980s, provided multinational corporations with tax breaks for moving jobs overseas.No, it doesn't and no it hasn't. What the tax code reasonably allows is U.S. companies not to pay taxes on profits not earned in this country. Businesses pay the taxes to the country where they are earned (at the rates those governments charge). Corporate profits are only taxed when it is brought back to this country. Because of our high corporate tax rates, businesses are discouraged from repatriating that cash. Lower tax rates would not only encourage businesses to repatriate that cash, it would encourage the companies to stay here in the first place.
Imagine, you owned a business in New Jersey and you moved it to Pennsylvania because you found the workers and the tax rates in the Keystone state to be better. But you continued to live in New Jersey. Would the Garden State be giving you "a tax break" if it didn't put lien on your house for moving your business to a more hospitable environment? Of course not.
Democrats and Republicans have talked for years about changing the code. The issue was debated in the Senate as recently as July, when Republicans blocked action on the “Bring Jobs Home Act,” which would have provided a 20 percent tax break for the costs of moving jobs back to the U.S.See the difference? An actual "tax break" is being proposed for business to moving jobs to the U.S. There isn't a "tax break" for leaving.
That measure, would, as well, have rescinded business expense deductions that CNN notes are now “available to companies that are associated with the cost of moving operations overseas."No wonder the GOP didn't support it.
The reason some businessmen, like Steve Jobs for instance, open a plant oversees is to escape the oppressively hostile business environment they find in states like California. They don't get U.S. tax breaks for doing so. They just aren't punished as severely as liberals would like them.
The Obama/Nichols position is like saying the federal government gives you a tax break for dying. Only, it doesn't. It charges you to leave this veil of tears as well.
UPDATE: Just saw this exchange in the comments section of today's column on this very point.
From Stephen Chapman:
Wow Gil - guess you don't know how to do any research do you? Companies DO receive tax breaks for shipping jobs overseas - just like they receive a tax break for moving to Iowa from Philadelphia. any normal business expense related to relocating operations is tax deductible - whether moving overseas or domestically. You could argue that Obama is being disingenuous when he says that companies receive a tax break for moving jobs overseas. But you didn't. You said he was wrong. Well Gil, guess you never heard of google or don't know any accountants or CPA's huh? Epic Fail Gil. Epic Fail.DelcoBrian responds: