The rule of unintended consequences is something the Obama administration has never studied or perhaps has never even heard of. Business leaders are beginning to speak out against many of the new proposed ways in which the President will essentially incentive companies to move more jobs overseas due to his tax increases.
June 3 (Bloomberg) — Microsoft Corp. Chief Executive Officer Steven Ballmer said the world’s largest software company would move some employees offshore if Congress enacts President Barack Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.
“It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”
Obama on May 4 proposed outlawing or restricting about $190 billion in tax breaks for offshore companies over the next decade. Such business groups as the National Foreign Trade Council, the U.S. Chamber of Commerce and the Business Roundtable have denounced the proposed overhaul.
U.S. tax rules let companies defer paying corporate rates as high as 35 percent on most types of foreign profits as long as that money remains invested overseas. Obama says he wants to end such incentives to keep foreign profits tax-deferred so that companies would invest them in the U.S.
The unintended consequence, of course, is that companies now have greater incentive to move jobs overseas to avoid the costly labor and tax burden from President Obama.
It isn’t just Microsoft:
Ballmer is one of 10 U.S. software company executives pushing back against the tax proposals in meetings today with White House officials including Jason Furman, deputy director of the National Economic Council, and the heads of congressional committees such as House Ways and Means Committee Chairman Charles Rangel, a New York Democrat.
Amazingly Charlie Rangel, of all people, actually opposes this change along with other business leaders and organizations.
In a roundtable discussion today, Ballmer, Symantec Corp. Chairman John Thompson and the heads of smaller companies such as privately held Bentley Systems, an Exton, Pennsylvania-based maker of engineering software, said such policies would hurt domestic investment, reduce shareholder value and increase the cost of employing U.S. workers.
Ballmer said that, while the Obama proposals would preserve expense deductions related to research and experimentation costs, the overall deduction limits for companies that defer tax on foreign profits would raise the cost of employing U.S. workers. Fiduciary responsibility to shareholders would require Microsoft to cut costs, he said, meaning many jobs would be moved out of the country.
Here’s an insane plan, lets just cut corporate taxes to incentive companies to create jobs here! I know, that’s crazy and it would work too well and we’d have more jobs that workers, but we could have worse problems.
This is a perfect illustration of Obama’s “tax everything that moves” policy and the affect it would have on the corporations who create jobs for Americans. Obama would continue to make labor more costly in this country, thus giving these companies no incentive to retain American jobs. This is basic economics and something the administration should take note of.
If they truly want to keep companies investing in America, they need to cut taxes here which would spur major economic development. Drop the corporate tax rate by 10 points or more, it would be better than any wasteful stimulus package without putting us more in debt. The spurred economic growth would create more tax revenue than we’re currently seeing.
More change we can believe in if we live where these jobs will be heading to escape Obama’s tax policies.