President Barack Obama took aim at Republican rival Mitt Romney’s tax plan at a campaign event in Cincinnati, citing a new study on the effects of tax cuts on foreign corporate earnings.
“His tax plan is not just to keep all the Bush tax cuts,” Obama said of Romney’s tax plan on Monday. “As I said, he wants to put another $5 trillion—this is estimated that it’s almost impossible for you to bring down the deficit and deal with the debt with that kind of tax plan. Nearly 40 percent of these new taxes would go to the top 1 percent of all households. We have not found any serious economic study that says Governor Romney’s economic plan would actually create jobs—until today. I’ve got to be honest. Today we found out there’s a new study out by non-partisan economists that says Governor Romney’s economic plan would, in fact, create 800,000 jobs. There’s only one problem: The jobs wouldn’t be in America. They would not be in America. They’d be in other countries. By eliminating taxes on corporations’ foreign income, Governor Romney’s plan would actually encourage companies to shift more of their operations to foreign tax havens, creating 800,000 jobs in those other countries. Now, this shouldn’t be a surprise, because Governor Romney’s experience has been investing in what were called 'pioneers' of the business of outsourcing. Now he wants to give more tax breaks to companies that are shipping jobs overseas.”
Obama was referring to a study by Kimberly Clausing, an economics professor at Reed College in Portland, Ore., which appeared in Tax Notes on Monday. Clausing calculated that a territorial tax system, such as the kind proposed by the Romney campaign, would lead to an increase in employment of 800,000 people in low-tax countries abroad.
“So I want everybody to understand, Ohio, I’ve got a different theory,” Obama added. “We don’t need a President who plans to ship more jobs overseas, or wants to give more tax breaks to companies that are shipping jobs overseas. I want to give tax breaks to companies that are investing right here in Ohio, that are investing in Cincinnati, that are investing in Hamilton County. I want to give incentives to companies that are investing in you, the American people, to create American jobs, making American goods that we’re selling around the world, stamped with three proud words: Made in America. That’s why I’m running for President of the United States. Now, the difference extends not just to the difference in corporate taxes, it's also individual taxes. We don’t need a President who is going to give himself a big tax break. We need a President who is going to cut your taxes.”
The Romney campaign disputed Obama’s charges. “President Obama is at it again today with another dishonest attack meant to distract from his own record of failure,” said campaign spokesperson Andrea Saul in a statement. “After spending three years pushing policies that drive jobs overseas and sending taxpayer money to foreign-owned companies, it’s clear President Obama doesn’t have a clue when it comes to job creation in America. Our corporate tax rate is the highest in the industrial world and impairs the ability of American businesses to both compete globally and create jobs here at home. Mitt Romney has a comprehensive plan to reform the corporate tax code that will lower rates, get rid of incentives for firms to create jobs in other countries, and encourage the kind of economic growth President Obama has been unable to deliver.”
The Tax Foundation’s Tax Policy Blog also disputed Clausing’s study, noting that her estimate of 800,000 jobs created abroad is simply foreign employment growth, not necessarily migration of jobs out of the U.S. Clausing’s calculation also relies on the current effective U.S. tax rate. Romney’s plan would lower the marginal tax rate to 25 percent and eliminate taxes on repatriation of jobs.
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