Gang of Six Proposal Encourages Corporations to Move Offshore
By: masaccio Wednesday July 20, 2011 4:24 pm
The Gang of Six isn’t satisfied by screwing over Social Security and Medicare, and imposing sneaky tax hikes on workers with the Chained CPI. They want to give billions of dollars in tax savings to the richest corporations in the US, and encourage them to move jobs overseas. That is the logical result of changing to a system of taxing income only if it is “earned” in the US. This is called a “territorial taxation” system. Currently we have a hybrid system. We tax income from whatever source, but we give a credit for foreign taxes on the income, and we don’t tax any of the money until it is repatriated.
The territorial tax will delight these monster corporations that have accumulated billions of untaxed profits overseas. They can invest the money off shore to create any new business they might want to enter, in any country they might like, and with little effort completely avoid US taxation. This removes any reason for any corporation to manufacture in the US for export. As soon as possible, the company simply moves production off shore, and uses tricks to make the profits in some low tax country. Jobs leave, exports drop, and so do tax revenues.
The rich benefit from higher stock prices as the profits of their pet corporations rise,. When they sell off the stock, they only pay at the low capital gains tax rates.
They want to end America (Added note: Most of you probably want to read about the Norway events. There’s a lot to be said about that — but this story is even more important.)
The Republican “Gang of Six” is making a demand that will actually increase the deficit — enormously. Trying to sell this proposal as a debt-reduction measure is like calling a proposal to lace breakfast cereal with arsenic the “Healthy Children Initiative.”
And I see no indication that Obama will fight this measure.
To put the matter very simply: The Republican plan will make it even more enticing for American corporations to outsource jobs.