Should foreign governments also implement such a policy to discourage Sony, Tonyota, and Siemens from hiring in the US?
I hope they don’t, but that’s up to those countries, not us. And it’s not like the target countries of most outsourcing (China, India, etc) have many companies that hire American workers, so I don’t think there would be much backlash. We could even tailor the law in this way- for hiring in countries like Japan, which have big companies that hire Americans, maybe we allow the deductions, as opposed to China.
He’s talking about tax deferral and the foreign tax credit, I think. If a company opens a factory in a country that has a lower tax rate then the US, they only pay the foreign country’s tax on the profit for sales they make there, and the rest is deferred until the money comes back here.
The Obama administration wants to get rid of tax deferral. Here’s a description of the process from the Tax Foundation (which opposes the Obama plan and supports keeping tax deferral).
What makes you think they don’t? It’s been a while since I did this sort of work, but when I did it, most counties did have similar rules, encouraging in country investment via deductions and discouraging it via no deduction…or even tax penalties if you shut something down and move the function out of the country (France, Japan and the Netherlands stick in my mind as having real severe tax implications when we’d close plants).
This.
Yes, I disagree. I think that policy would have a net unfavorable impact on our economy, impacting the most people in an unfavorable way. Obama (and his economists) know this, too. It raises prices for everyone.
Whether we like it or not, it’s a global economy, and capital flows to the cheapest resource. It has always behaved thusly, and to try to influence it otherwise raises prices. It is a fool’s errand. I’m not running for president, so I can point out this obvious fact.