Destroying Jobs in Order to Save Them

Obama's corporate tax "reforms" make a bad situation worse.

Veronique de Rugy from the August/September 2009 issue

(Page 2 of 2)

Corporate inversions are just one of many ways in which a U.S. firm can end up being owned by a foreign parent company. A forward-looking American startup may decide to incorporate abroad to enjoy long-term tax savings. That means fewer new jobs in the United States. Foreign acquisitions of U.S. companies have soared from $91 billion in 1997 to $340 billion by 2007.

Is it the president’s goal to destroy jobs? Probably not. So instead of making the corporate tax system worse, why not reform it? Why not avoid old protectionist tricks such as Buy American provisions and instead let U.S. firms compete abroad without the chains of the U.S. tax code?

Contributing Editor Veronique De Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Comments

MJ|7.14.09 @ 7:24AM|#

Should we be surprised that in formulating corporate tax policy Obama chooses to be a good leftist rather than a good policymaker? Given the left's usual talking points about how corporations are evil, not paying their fair share, and that any tax break for the rich is burden on the poor, any Democrat politician that owuld go against that consensus is his party would have to be particularly brave. Obama has proven by his past record to be a coward on controversial issues. And then there is the distinct possiblity he actually is a true believer in party's destructive economic prejudices and policies.

Taxed Enough Already|7.14.09 @ 7:45AM|#

So 0bama's looking to simplify our taxes by raising them, eh? Well, you know the old joke about that, don't you? The new simplified 1040EZ tax forms will be one page and have just two lines on them:

Line 1: How much did you make this year? _____.__

Line 2: Send it in.

LibertarianBlue|7.14.09 @ 9:57AM|#

MJ

Some of the Blue Dogs are speaking out so Obama is hitting road blocks but they will be only temporary. In addition does anyone actually believe Obama will do anything remotely close to good policy?

|7.14.09 @ 10:02AM|#

Obviously, the only solution to rising unemployment is to tax the organizations that create jobs.

Xeones|7.14.09 @ 10:05AM|#

"No business wants to invest in a place where the government skims 20 percent off the top." --Barack Obama

|7.14.09 @ 10:18AM|#

FYI: quoting the American Enterprise Institute on anything impairs your credibility with me.

Fuck AEI.

|7.14.09 @ 10:21AM|#

Fuck Fred Kagan.

SimsP|7.14.09 @ 12:08PM|#

It's sad when "Corporate Inversion" sounds promising.

|7.14.09 @ 12:21PM|#

There are another onuses associated with taxation of corporations. The owners, i.e., the stockholders, are taxed on the dividends paid from the already taxed profits. If the entity was a sole-proprietorship or partnership rather than a corporation, the owners are taxed only once on the profits - except maybe in New Mexico where any business entity is also taxed on gross receipts independent of any profit. By any decent standard such excessive taxation is simply unjust.

|7.14.09 @ 1:01PM|#

Corporations that don't invert will be ripe for acquisition by international firms who will pick up an immediate, and possibly significant, return based on the difference in tax rates, and thus accelerating the decapitilization of the US economy. Citizens may wish to be patriotic, but shareholders will no longer allow businesses to be and capital will flow quickly to countries that understand that.

Our owners, the Chinese, must be loving this. It's like a cherry on top of cap & trade.

perilisk|7.14.09 @ 1:10PM|#

"By any decent standard such excessive taxation is simply unjust."

Limited liability corporations are given special legal protections that could almost certainly not arise naturally without government intervention (unless a company literally got a limited liability agreement with everyone who could ever potentially sue them). Every limited-liability corporation is implicitly a private-public partnership and as such it's only fair that they are subject to additional taxes and regulation.

LarryA|7.14.09 @ 1:54PM|#

Every limited-liability corporation is implicitly a private-public partnership and as such it's only fair that they are subject to additional taxes and regulation.

Proving that a policy can be "fair" and "stupid" at the same time.

Paul Krugman|7.14.09 @ 3:01PM|#

Nuh uhhh.

|7.14.09 @ 3:09PM|#

I have no idea how that is even supposed to make sense. It's like the new CAFE standards. You claim you want to help save American companies and jobs yet, at the same time, you make it harder for these companies to turn a profit.

I'm beginning it wonder if this jug-head (Obama) is just as brain damaged as the last one (Bush).

|7.14.09 @ 3:23PM|#

To Perilisk: The argument was against excessive, here double taxation on the same income. Many other public-private entities receive limited liability protection under law, e.g., unions, physicians (laws putting caps on tort claims) and politicians (laws exempting them from certain laws they themselves passed) - yet they are not subject to double taxation. So I stand by my statement: "By any decent standard such excessive taxation is simply unjust."

FYI|7.14.09 @ 5:27PM|#

P. Brooks is a known idiot.

Chad|7.14.09 @ 6:15PM|#

Yes, the corporate tax rate should be set to zero.

Yes, capital gains should then be taxed as regular income.

Problem solved.

|7.14.09 @ 9:23PM|#

Despite the fact that we all will be paying higher taxes, every person on American soil will be able to afford housing. Obama announced his new Housing Dictate at a recent town hall in Texas.
See details here:

http://www.velveetaelvis.com/Breaking_News_.html

Right Wing Cynic|7.15.09 @ 9:34AM|#

"I have no idea how that is even supposed to make sense. It's like the new CAFE standards. You claim you want to help save American companies and jobs yet, at the same time, you make it harder for these companies to turn a profit."

Think of the bigger picture. It all makes perfect sense if the goal is to make the federal government (and its cronies in big business and labor) the exclusive agent(s) for allocating income and wealth (which I believe it is). This is simply one in a series of income/wealth transfers to the well connected (think UAW and Goldman Sachs), from the rest of us. Similar transfers to energy companies (the rigged Cap and Trade scam) and drug/insurance companies ("health care reform") are also in the works. When people wake up to how badly they are being screwed here, it is going to be ugly.