At least that's what Kevin Hassett over at Bloomberg.com is musing as he questions Obama's bad idea of closing a corporate tax "loophole".
So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned? How could Obama possibly say, as he did last month, that he wants “to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens?” Further, how could Treasury Secretary Tim Geithner call a practice that top scholarship has shown increases wages and employment in the U.S. “indefensible?”
I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations.
If that occurs, the firms that stay in the U.S. will be at such a huge tax disadvantage that they will absolutely need a “rescue.”
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Microsoft routinely lobbies for increases in the number of H1-B visas, which they use to import workers who will work for less money than comparably-educated Americans*. Maybe they won't have as many or as quality interested candidates if "legal U.S. residency" isn't part of the compensation package, but it's hard to take Microsoft "moving jobs overseas" seriously when the jobs are already being done by foreign workers.
ReplyDelete* They do say it's because there aren't enough Americans educated well enough in math/engineering, but they never push the point and note that math education is not a priority in American schools (sex and global warming come first, followed by self-esteem...).