In a move that already has multinationals mobilizing their lobbyists, Obama announced his intention to close tax loopholes and tax havens for American based multinational corporations. In support of his proposal, Obama claims that his plan would generate $210 billion in revenue and also create American jobs. Those who oppose the plan claim that it will hurt American companies and will reduce employment.
On one hand, the proposal would seem to be able to achieve its goals. After all, if companies can no longer get out of paying taxes, then tax revenue would increase. Also, if corporations did not gain an advantage from moving jobs overseas, then they would be less inclined to do so.
On the other hand, there are reasons to think the plan might have the opposite result. In general, corporate folks seem to be more concerned with profit than with contributing their fair share to the general good. As such, some of them might decide to move their operations completely overseas in order to take advantage of the tax breaks and low wages available outside the United States. This would, of course, result in a loss of tax revenue and jobs.
Of course, a citizen who insisted on special tax breaks and threatened to leave America for another country if he did not get them would be regarded as being rather unpatriotic and trying to threaten or blackmail the government. Naturally, such a person would not be well regarded.
Another reason that the proposal might have an impact the opposite of what Obama intends is that the companies affected by it might lose ground relative to foreign competitors and this would impact their revenue and the jobs they have available.
Of course, this does raise the question of whether this loss would be greater than the loss in revenue and jobs of the current situation.
While the Republicans will no doubt be very much against this plan, their professed views should drive them to embrace it.
First, Republicans have often made a big deal about how illegal immigrants are stealing American jobs. If they are concerned that foreign nationals are taking American jobs, then they have a chance to do something to prevent it by supporting this plan. After all, if it is bad for a Mexican to sneak across the border and grab a job in the US, then it should be equally bad for a corporation to sneak a job across the border for a non-American to fill.
Second, Republicans have often railed against government involvement in business and cry out for the free market. The loopholes and such provided by the government are clear cases of government involvement and they also go against the free market. As such, the Republicans should insist that the state not meddle in the free market by giving such benefits to the corporations.
Third, the Republicans are often big on talking about patriotism, loyalty to America and serving the country. By supporting this plan they can show that they love America by helping to ensure that the American corporations show their patriotism and loyalty by paying their taxes and serving the country. Anything less would be unAmerican and would probably be soft on terror. Well, not really-but the Republicans still love to talk about terrorism.
Fourth, since the time of Reagan Republicans have expressed their loathing of those who sponge off the government. This proposal gives them a chance to act on that principle and get those corporate welfare queens off the dole.
So, this proposal perfectly matches many of the principles professed by Republicans. As such, they should support it.
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Unless you’re employed by government or a very small private business, everyone works for a “corporation.” Start punishing “them” and you punish everyone working for them. Corps are far more than dudes in Oakley blades and dark suits wearing $3000 shoes. They get taxed less to encourage growth. Taxing them more does two things: Both bad.
Most people may think it’s a great idea to make the corps pay there “fair share”. Until those people realize that they are the corps.
1) Causes them to cut jobs, wages and benefits.
2) Denies them funds for growth.
That is the downside of taxing. But, there is the tax dilemma:
Tax too much: the harm is that business have less money to hire people and grow. Individuals have less money to spend, so business get even less money-thus sparking a potentially vicious circle.
Tax too little: important government services (education, infrastructure support, defense, and so on) become underfunded.
The challenge is getting the taxes just right. Of course, the folks in office can always find a way to spend more than they take in (they love that pork). So, as the smart conservatives say: you have to curb spending.
Ideally, taxes would be just high enough to cover the necessary services and not a penny more. To do that we’d have to terminate a whole bunch of politicians. I see no downside…:)
Democrats like to talk about gay marriage and waterboarding.
So do Republicans. Perhaps we could have a bipartisan compromise: suspected terrorists will be tortured by being gay married.
That being said, I’m for Obama taxing the overseas money that the corporations are making. It’ll bring more jobs back here.
Agreed. We just have to be careful to tax smart and not hurt companies that are doing well overseas and using that to help keep American jobs going as well. After all, we want our business to be successful around the world.
Wait…is “tax smart” a contradiction? Hmmm…
I agree that they should punish tax ‘cheats’ severely. I think we should start with his cabinet appointments. Geithner is a good example. Claiming kids summer camp as a business expense after his accountant warned him not to. Whoops, an oversite. Doesn’t the IRS fall under his department?