ECONOMICS - The Boring Stuff

"International tax policy, blah, blah, blah" By John Feehery, The Hill 04/21/10

Excerpts

Jobs, American competitiveness and the future of the world economy — and America’s place in it — are not so boring.

The boring stuff has a profound impact on the more exciting stuff.

Ryan (R, Wisconsin) is a policy geek, but he is also a politician, so he has figured out how to talk about this issue in ways that make sense to non-geeks likes me. He uses the example of his home-state manufacturer Harley-Davidson, a company that has to compete with international competitors from Italy and Japan and yet faces the American corporate tax rate, which is the second-highest in the world, and a complex regime of international taxes that more often than not leads to its products being double- and triple-taxed. Ryan, noting that the corporate tax rate actually generates only 6 percent of our national revenue, thinks we should just ditch it and replace it with a business value-added tax, which could be easily removed as our products move overseas, making American products much more competitive on the world stage. That kind of tax simplification would also likely lead to more companies staying here in America, meaning that more jobs would stay here in the States.

While Ryan focused on how we could make our corporations more competitive on the international stage, Sperling (senior counselor to the Treasury secretary) focused on how we could get corporations to pay more in taxes. In fact, he touted, as the lone accomplishment of the Obama administration, its efforts to crack down on overseas tax cheats. For Sperling and the administration, it is all about balance. How do you make sure that everybody is paying his or her fair share while also ensuring that the playing field is tilted in favor of job creation? He acknowledged that finding that balance is difficult, and brought up the issue of tax deferral as a perfect example of those difficulties. Sperling believes that it is unfair for a multinational company that sets up an international subsidiary to be able to defer taxation on overseas sales if those profits stay overseas. He thinks that that gives a perverse incentive to companies to move their manufacturing jobs abroad.

Bold emphasis mine

Boring.... ZZZzZZzzzz.... WAITE! Where did my jog go!