The voices of Tax Policy Center's researchers and staff
President Obama’s new international tax proposals promise to “replace tax advantages of creating jobs overseas with incentives to create them at home”. The main offender is the so-called deferral provision. Under current law,
But does deferral cost American jobs? The simple answer is no. The number of jobs in the
For example, a tax incentive for foreign investment may cause U.S. companies to close plants here and manufacture more overseas, paying wages to foreign instead of U.S. workers. This raises the incomes of these foreign workers so they spend more overseas and on
You can substitute any of your favorite causes and come to the same conclusion. “Green” jobs are great for a lot of reasons, but replacing a dirty job with a green job does not increase employment.
But, you might ask, wouldn’t deferral's benefits raise employment in
I don’t say this to disparage the Administration’s international tax proposals. There are valuable provisions that would improve enforcement tools and close loopholes that erode the corporate tax base. And the pros and cons of paring back deferral reflect a complex trade-off between the efficiency gains from taxing all investment of U.S. corporations at the same rate and the efficiency costs of taxing U.S. resident corporations less favorably on the same investments as foreign-residence corporations. But despite the great sound bite, these provisions won’t increase U.S. jobs.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.