Read the report.
Washington, D.C. — As the debate over off-shoring American jobs intensifies, the Center for American Progress Action Fund today released a report illustrating how Republican presidential nominee Mitt Romney’s proposal to permanently exempt foreign corporate profits from U.S. taxation incentivizes companies to use accounting gimmicks, stash their money in offshore tax havens, and ship American jobs overseas. The report was discussed this afternoon on a press call featuring CAP Action President Tom Perriello, former Ohio Gov. Ted Strickland, and AFL-CIO President Richard Trumka.
Although overseas profits are already treated generously by the U.S. tax code, Romney’s tax plan would tilt the playing field even more against job creation in the United States. Ultimately Romney’s new corporate tax incentive would have three major consequences:
- A bigger corporate reward for shipping U.S. jobs abroad: A U.S. corporation deciding whether to build a factory in the United States or elsewhere would know that the returns from its investment, if made abroad, would be permanently free of U.S. tax—not merely tax-deferred, as under our current system. For the multinational the choice would be obvious: take the large tax cut regardless of if the end result is the loss of even more American jobs. It is estimated that 800,000 jobs would migrate to foreign countries, potentially displacing U.S. jobs.
- A tax windfall for companies that have already shipped U.S. jobs abroad: Because the Romney plan would not only apply to future overseas profits but also to corporations already storing profits overseas, the policy provides a windfall to the very companies that have been most successful in avoiding U.S. tax by shifting jobs, investments, and profits overseas.
- An invitation for further corporate abuse of overseas tax havens: While under the current system the tax on overseas profits is deferred, the incentive to shift profits to countries like Bermuda, the Caymans (where Romney himself safeguards millions), and Switzerland would be significantly larger under a system that permanently exempts overseas profits from U.S. tax.
The result of this tax policy is a $130 billion tax cut over 10 years for multinational corporations. Combined with Romney’s proposal to slash the top corporate rate, a move that would cost more than $900 billion, the total corporate tax cuts in the Romney plan reach more than $1 trillion.
This plan, one that would do nothing to strengthen American competitiveness and only exacerbate trends toward destroying American jobs, sits in contrast with President Barack Obama’s plan. Where Gov. Romney would reward American job destruction and artificial profit shifting, President Obama would level the playing field for job creation here at home. One plan clearly helps the American economy, and one plan profoundly damages it.
Key quotes from the press call
CAP Action President Tom Perriello:
- “Outsourcing is one of the most serious economic threats we face in this country and have for some time. What this report makes clear is that outsourcing is not just a central part of Gov. Romney’s past, but a central part of the present and future that he is proposing for the United States, at great peril to the working and middle class."
- “At a time when working and middle-class families are feeling tremendous economic uncertainties with the recovery that we’re going through, the last thing that we want to prioritize is sending more American jobs overseas. As the report indicates, we could see approximately 800,000 American jobs sent overseas through the incentives put forward in Gov. Romney’s tax proposals.”
- “We know that when we prioritize investment in America and in American workers, that everybody wins. This is about a positive agenda to build, make, and grow things in America again. We believe that the American worker and the American entrepreneur are capable of building, making, and growing things in America today so long as they’re not punished for that patriotism by a tax code such as the one being proposed by Gov. Romney.”
Former Ohio Gov. Ted Strickland:
- “Romney’s background in steering jobs overseas is, of course, troubling and especially to a state like Ohio, where I am from, but even far more concerning to me is the platform that this candidate is running on today. Whether or not you believe that Romney’s time at Bain is fair game for campaign attacks, his proposal to permanently exempt ‘foreign’ corporate profits clearly illustrates how a President Romney would take on the role of ‘outsourcer in chief.’ Overall, Gov. Romney’s foreign tax policy is a $130 billion handout over 10 years to multinational corporations."
- "Under the Romney plan, rewards for exploiting corporate tax havens like Bermuda and the Caymans—where we know Romney himself has safeguarded millions—would be significantly larger. Multinationals already artificially stash billions in profits in tax-haven countries, but this gamesmanship would only be further encouraged by the Romney plan to permanently exempt foreign profits from U.S. taxes.”
AFL-CIO President Richard Trumka:
- “The dangerous practice of outsourcing good American jobs that we’re discussing today is one of the most important issues for working people. As we’ve seen in the national debate over the last several weeks, the November elections will be a critical turning point. Will we commit to supporting investments in America and rebuilding our nation? Or will we allow Mitt Romney and his 1 percent friends to keep giving taxpayer’s money to companies that offshore good American jobs?"
- “Mitt Romney has a well-documented history of profiting off of closing U.S. factories, laying off hundreds of workers, and stashing money in offshore tax havens. These are practices destroying our economy, yet [practices] that he believes in to his core, and [practices] that he wants to expand. That’s why I believe a Romney presidency would constitute an existential threat to America’s already weakened middle class."
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To speak with a CAP expert on this topic, please contact Katie Peters at [email protected] or 202.741.6285.
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