Tax Proposal Draws Unemployment Controversyby Tim Manni
In what President Obama characterized as an effort to secure more U.S.-based jobs, he announced a plan yesterday that will limit tax advantages to multinational companies. The tax plan was met with questions of skepticism from both lawmakers and business groups. The president defended his proposal by pointing out the unfair tax advantages reaped by Americans who operate overseas:
The U.S. tax code has made it “all too easy for a…small number of individuals and companies to abuse overseas tax havens, to avoid paying any taxes at all,” the president said. “And it’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.”
The effort, which the president says will create more U.S. jobs, has business owners in complete disagreement:
Business groups on Monday warned that Mr. Obama’s plan would eliminate American jobs, not add them. They said the current rules are aimed primarily at putting U.S. companies on an equal tax footing with international rivals, many of which benefit from favorable tax treatment by their home countries.
“The overseas operations of U.S. multinational companies support jobs and higher living standards here at home,” said John Castellani, president of the Business Roundtable, an association of chief executives of major corporations.
Lawmakers are likely to carefully consider these criticisms as they strive to improve faltering unemployment rates across the country. A Treasury official countered those remarks by claiming that the new policy will correct the imbalance that exists between multinational and small businesses who, while generating the bulk of American jobs, do not qualify for the same overseas tax breaks (emphasis added):
Some of Mr. Obama’s ideas could be implemented this year, some observers said, particularly as Congress searches for revenue later this year to offset the costs of initiatives, such as extending expiring tax breaks for research, fixing the muddled estate tax, or possibly expanding health care.
With such differing opinions on how this tax policy could affect American jobs, who should we believe?