NAM: New taxes on corporate foreign earnings a 'disastrous proposal'
National Association of Manufacturers (NAM) President John Engler today offered his strong opposition to President Obama's proposals to change rules governing the taxation of foreign earnings of U.S. companies, saying the plan would seriously damage U.S. competitiveness and cost jobs.
Engler welcomed President Obama's support of a permanent Research and Development Tax Credit, but said the other tax increases would undermine the ability of companies to compete overseas.
"President Obama's proposal to impose more than $100 billion in new taxes on corporate foreign earnings will destroy jobs in the United States and make U.S. companies less competitive globally," Engler said.
"The rhetoric on this issue fundamentally misrepresents the nature of global taxation and global competition," he continued. "At a time when our economy is struggling and thousands of jobs are being lost every month, imposing an additional tax on U.S.-based international companies would put them at a massive disadvantage and cost American jobs."
"Limiting deferral and further restricting foreign tax credits would simply increase the U.S. corporations' tax bill based on their overseas operations, making them less competitive against their foreign-based competitors," he said. "In turn, the impact would fall hard on U.S. companies, their suppliers and their employees here at home."
An estimated 21 million people in the United States—more than 19 percent of the total U.S. private sector workforce and 53.3 percent of all manufacturing workers—are employed by companies with operations abroad. These overseas operations help the U.S. companies reach the 95 percent of the world's consumers who live outside the United States, Engler said.
Unlike many other countries, the United States has a worldwide tax system so income is taxed wherever it is earned. In contrast, most developed countries charge little or no tax on foreign earnings. With the U.S. system of deferral, foreign affiliates of U.S. companies pay the same rate of tax as their foreign-owned competitors while those earnings remain reinvested overseas.