Saturday, July 26, 2014
President Obama Addresses Corporate Tax Inversion in Weekly Address
In President Obama's Weekly Address for July 26, 2014, President Obama addressed the trend of corporate tax inversion. Describing it as corporations renouncing their U.S. citizenship, countries are incorporating in other countries even though most of their operations are still in the United States to avoid paying corporate income taxes in the United States. The problem this presents to the U.S. economy is that profits will be stashed overseas and not in the United States. Profits will remain there to avoid paying taxes, resulting in the U.S. to miss out on economic development and job creation.
Obama said that the way to “level the playing field” is to lower the corporate tax rate, close “wasteful” loopholes, and simplify the tax code. Lowering the corporate tax rate is a step in the right direction. The problem with closing the “loophole” is companies that are willing to relocate overseas will find ways around the loophole including moving more of their operations and jobs overseas if that is what it takes. It'll just chase more companies and jobs overseas. Simplifying the tax code requires a lot of untangling.
What we need to do is create a tax environment that encourages potential defecting corporations to stay. The most effective way to do that is to pass the FairTax proposal. The FairTax proposal (H.R. 25) repeals income taxes not only for corporations but also individuals and replace the revenue with a consumption tax. With corporate income taxes no more, global companies would be able to freely move their overseas profits to the U.S. tax free, thus injecting money into the U.S. economy without borrowing from China. The more money borrowed in the U.S., the more money spent in the U.S., the more jobs created in the U.S.
For more information about the FairTax, visit the official FairTax website at http://www.fairtax.org.