Economics

On the Foreign Tax "Loophole"

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Washington Post econ columnist Robert J. Samuelson goes after some commonly held Obamaesque myths about taxing U.S. multinationals' overseas operations:

Myth: Aided by those overpaid lobbyists, American multinationals are taxed lightly—less so than their foreign counterparts.

The price you pay for the chicken in China

Reality: Just the opposite. Most countries don't tax the foreign profits of their multinational firms at all. Take a Swiss multinational with operations in South Korea. It pays a 27.5 percent Korean corporate tax on its profits and can bring home the rest tax-free. By contrast, a U.S. firm in Korea pays the Korean tax and, if it returns the profits to the United States, faces the 35 percent U.S. corporate tax rate. American companies can defer the U.S. tax by keeping the profits abroad (naturally, many do), and when repatriated, companies get a credit for foreign taxes paid. In this case, they'd pay the difference between the Korean rate (27.5 percent) and the U.S. rate (35 percent).

Myth: When U.S. multinationals invest abroad, they destroy American jobs.

Reality: Not so. Sure, many U.S. firms have shut American factories and opened plants elsewhere. But most overseas investments by U.S. multinationals serve local markets. Only 10 percent of their foreign output is exported back to the United States, says Harvard economist Fritz Foley. When Wal-Mart opens a store in China, it doesn't close one in California. On balance, all the extra foreign sales create U.S. jobs for management, research and development (almost 90 percent of American multinationals' R&D occurs in the United States), and the export of components. A study by Foley and economists Mihir Desai of Harvard and James Hines of the University of Michigan estimates that for every 10 percent increase in U.S. multinationals' overseas payrolls, their American payrolls increase almost 4 percent.

Whole thing here.

NEXT: "Are you telling me that nobody at the Federal Reserve is keeping track on a regular basis of the losses that it incurs on what is now a $2 trillion portfolio?"

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  1. Excellent. Most people don’t understand that roughly 85% of our economy is domestic. Imports and exports only make up a 15% slice. We’re really a closed economy when you get right down to it.

  2. Matt,

    Thanks for the cute Asian chick on the left!

    I see some words there below her. Gonna read them in a bit.

  3. Matt,

    Now, thanks for the impending flood of no-nothing Leftoids who don’t know what any of the words you quoted mean.

    Sprinkling “Wal-Mart” in there is like salt-lick baiting for deer 🙂

  4. Naga,

    Most people don’t understand that roughly 85% of our economy is domestic. And the other 90% was exported by Halliberton!!!!!!

    There, fixed that so you can pick up liberal chicks.

    Fixed my handle too with that cool word I learned from SugarFree!

  5. Caption Contest!

    “Oh, to get to other side! Good one! High Five!”

  6. This article is a lone jackoff magnet.

  7. At least someone appreciates my vocabulary services…

  8. Caption:

    “They call it a ‘high five.'”

    “America, you so crazy.”

  9. SF,

    In the Snowcrash future would I have the whole phrase tattoed into my forehead or just the initials? If the second, it could confuse Nazis who don’t spell well.

  10. Funny you should use that term . . . “services”. Considering my eyes get raped on a regular basis by your vocabulary and links. Rape isn’t a service, dammit!

  11. The ads aren’t changing yet.

    Asian, Hot, Single, Asian, Hot, Single, Asian, Hot, Single, Asian, Hot, Single, Asian, Hot, Single, Asian, Hot, Single.

  12. Considering my eyes get raped on a regular basis by your vocabulary and links.

    Don’t forget the interwebz screatching to a halt from his typical links.

    Asian, Hot, Female.

  13. Rape isn’t a service, dammit!

    Maybe your eyes shouldn’t be running around in that short skirt.

  14. HEB! Don’t do it, bro! I’ve dated Asian chicks! They are trouble! Trouble I tell ya!

  15. I brought you Cougarstar! Who else can say that?

  16. Don’t do it, bro! I’ve dated Asian chicks! They are trouble! Trouble I tell ya!

    Quit being so eurocentric. I want a nice normal one born and raised in the US of A.

    But looking at those ads is a lot better than looking at pigman begging for dollars (left margin).

  17. You guys see ads? Lame.

  18. Oh, HEB. You fool! You foolish fool!

  19. SF,

    Work ‘puter. No control over the software. It is not my property, I shall not volate the usage policy.

    Japan, Korea, Singapore, Thailand, Shanghai . . .

  20. SugarFree,

    I don’t have any idea what they’re talking about, either.

    As for Cougarstar, is that like Sinistar?

  21. Curious: is the Boys section of a Chinese Walmart proportionately larger than the Girls section?

  22. But facts hurt Democrat vaginas.

  23. JB tosses more bait into the field: Democrat!

  24. I SAID get BACK in the KITCHEN BITCH!

  25. So, my 2:21pm kept the leftoids away? Must be something else.

  26. “Thanks for the cute Asian chick on the left!”

    She looks finger lickin’ good!

  27. PL,

    As for Cougarstar, is that like Sinistar?

    All the Pelosi and Feinstein flash porn from yesterday got us a Cougar dating site spambot yesterday.

  28. At least Joan Rivers is still on the front page.

  29. End of the world is just around the corner . . .

    Sex Drives and Eating Disorders. A post at Feministing quoting FOX News in a positive manner.

  30. Thank God for Adblock.

  31. The biggest reason to avoid an asian girlfriend: asian grandparents.

  32. It is not my property, I shall not volate the usage policy.

    If your usage policy allows commenting at H&R, its the most lenient one I’ve ever heard of.

  33. This site has ads?

  34. If your usage policy allows commenting at H&R, its the most lenient one I’ve ever heard of.

    I saw nothing of that, but I did see the no software messin’ with stuff part!

  35. I saw nothing of that, but I did see the no software messin’ with stuff part!

    Oh, piffle. Anything in the policy that isn’t backed up with a technical control is a mere guideline. If your computer lets you do it, it must be OK, right?

  36. Huh. The president lies. I am depressed.

  37. YOU’RE NOT CHINESE!!!!!!!

  38. Is it me, or does Colonel Sanders look like a Chinese guy in that picture?

  39. Colonel Sanders looks like Tom Hanks in that picture.

  40. Slightly off topic:

    Frustrating exchange on NPR, this morning. Bill Radke on Morning Marketplace was talking to some guy about what the “American Dream” was in China. After a disjointed description about how they don’t think at all like us and everyone in China feeling home ownership is extremely important (No, nothing like Americans), Radke went on to ask something about whether the Chinese want to own cars.

    Instead of answering Radke’s question, the guy went off on a tangent about how billions of Chinese people can’t own cars because it’s not sustainable and will be bad for the planet, ‘n stuff. So basically, I’m very enlightened on what this one white guy’s perception on Chinese people owning cars is, but I have little new insight into what the Chinese people actually want.

  41. If your usage policy allows commenting at H&R, its the most lenient one I’ve ever heard of.

    Technically true. But probablility says that either all of these people that comment here are unemployed, work the graveyard shift, or have a usage policy which by virtue of implementation, allows one to comment on H&R.

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