It seems as if Obama and his administration are intent on passing every tax increase possible before their time is up. That’s why the newest proposed tax on American companies that have plants overseas shouldn’t come as a surprise. A WSJ editorial from this weekend notes:
“This tax increase is being promoted by President Obama, who declared last week that ‘for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries. I want to change that.’"
But the tax will likely have the opposite effect. As Microsoft CEO Steve Ballmer warned,
“If [the] President’s plan in enacted, Microsoft would move facilities and jobs out of the US.”
That shouldn’t surprise anyone. Companies fed up with America’s exorbitant corporate taxes can move their headquarters and operations overseas entirely. At some point, it simply prudent to do that. High taxes in the USA could even make that the CEO’s fiduciary responsibility.
Of course, this would not only defeat the whole purpose of the tax by driving more jobs out rather than bringing them in, but it will also take money out of the American economy.
Here’s a thought: try lowering taxes! Even Paul Volcker, President Obama’s economic advisor, says that America should actually lower the corporate tax rate close to the international average (about 19%) thereby “reducing the incentives of US companies to shift profits to lower-tax jurisdictions abroad.”
Don’t forget who will bear the brunt of these taxes, Mr. Obama. It’s the consumer who will have no choice but to pay the inevitably higher prices. And the unemployed workers who won’t even know what jobs they might have had.