Bringing Us Together

By May 5, 2009Economy, Taxation

Front page, Washington Post:

Targets…

Tax dodge…

Crack down…

Major offensive…

Companies that ship jobs overseas…

Moving jobs off our shores…

None of this invidious, populist rhetoric from the President and the Post has anything to do with the reality of taxation of overseas earnings.

For a more restrained, fair-minded analysis of the President’s proposal we turn to the New York Times’ editorial page, a reliably anti-corporate font of left-liberal opinion. From “Tax Salvos“:

The Obama proposals oversimplify the challenge, both technically and politically.

One of the most controversial proposals would delay deductions against overseas profits until those profits are brought back to the United States. In theory, that makes perfect sense, because matching deductions and income in the same year is a fundamental principle of United States tax law.

In practice, applying the matching principle to overseas operations could put American companies at a competitive disadvantage to foreign companies that do not face United States tax laws. It could even impede job creation in the United States — exactly the opposite of what the Obama administration intends. That’s because some of the expenses incurred in generating foreign profits are for support jobs in the United States, like human resources and accounting positions. If companies cannot write off those employment expenses in the year they are incurred, they may move the jobs overseas.

That’s the reality of it.

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