A Treasury Department official briefing reporters on the proposals Monday said the Obama administration is trying to "strike a balance" on overseas income between keeping U.S. firms competitive and removing tax code distortions that might cause a firm to "invest in Malaysia instead of Michigan."
The reason why a US firm will "invest in Malaysia" is because there is more growth there then in Michigan. There are just more people in Malaysia joining the middle class that will need the things that the US sells. So HP would much rather build a plant in Malaysia and sell printers and PCs in close proximity to the growing wallets of the buyers. If HP wasn't in that market for whatever reason then Lenovo would be in there faster then you can think. Plus you can bet Lenovo isn't paying a 32% tax rate.
These tax distortions are just arbitrary and force companies to keep their profits perpetually invested in that foreign place. If they really want to grow the economy then they should allow these companies a tax break to repatriate these assets in exchange for hiring US workers or preventing layoffs. If Obama was serious about jumpstarting growth in the US then they would cut corporate taxes and watch the revenue pour in.
No comments:
Post a Comment