Obama’s Multinational Tax Policy

But last week, Microsoft Chief Executive Officer Steve Ballmer came to Washington to announce what Microsoft would do if Obama’s multinational tax policy is enacted.

“It makes U.S. jobs more expensive,” Ballmer said, “We’re better off taking lots of people and moving them out of the U.S.” If Microsoft, perhaps our most competitive company, has to abandon the U.S. in order to continue to thrive, who exactly is going to stay?

At issue is Obama’s policy to end the deferral of multinational taxation.

The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate.

Tax Burden

U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home.

The economically illiterate partisan Democratic view is that this practice is unpatriotic and bleeds jobs from the U.S. The economic reality is that American companies use this approach to acquire market share overseas. The alternative is losing the business to foreign competitors.

You can spot an ignorant citizen, and voter, when they claim they don't care about taxes, because they don't pay any, or that they like Obama and the Democrats because they aren't going to raise their taxes.

To answer the first argument, taxes effect you directly whether you pay them or not. Corporate taxes for example influence corporations decisions on how many people they can hire, how much to charge for their products and services, etc. If corporate taxes are too high, you can lose your job, get paid less, pay more for their products and services, or the company can simply crumble, and the country loses out on the jobs, products, and revenue.

Second, and this answer is short, Democrats are not the party of low taxes, they are the party of tax and spend, redistribution, government waste (though Republicans as of late have not been much better, if any), and taxation through what they think are subversive means.


Trey anastasio said...

Hey im doing a blog on corporate tax for a school writting project and i agree with alot of your arguments. You should do a follow up blog....if your intrested you could commit on my blog at uscorporatetax.blogspot.com

Post a Comment

I reserve the right to delete profane, obscene, or otherwise insulting messages. So please, keep it clean.

While you're at it, visit our message boards!