Accusing Companies of ‘Exploiting Loopholes’

House Majority Leader Steny Hoyer issued a statement following Senate 61-39 passage Thursday of H.R. 1586, the bill that includes federal funding for teachers, police officers and other state and local public employees. Excerpt:

It has been especially cynical for Republicans to label as “special interests” the teachers who educate our children, the police officers who patrol our streets, and the firefighters who risk their lives for our safety. This is particularly hypocritical in light of Republicans’ continued support for tax breaks for corporations that send American jobs overseas. In the Republican worldview, corporations exploiting tax loopholes are not special interests—but teachers are. Because Democrats reject that view, we will return to session next week to send this legislation to the president’s desk.

We’ll leave it to The Washington Post’s editorial today, “Education jobs bill is motivated by politics,” to discuss the merits of the legislation. Suffice it to say that pretty much everything Congress does from here until election day will be motivated by partisan positioning, and the generals lines of attack are already clear: “profligate spenders borrow and spend America into bankruptcy while they wreck the economy” versus “greedy, selfish exploiters don’t care about people while they wreck the economy.”

Even recognizing the comments as campaign rhetoric, these incessant condemnations of business and accusations that corporations are “exploiting loopholes” to “send American jobs overseas” are objectionable, wrong, and surely do harm to the U.S. business climate.

These supposed loopholes that Hoyer attacks are the result of policy decisions made by Congress that created the U.S. system of taxation, which does not overseas tax earnings until they are returned to the United States.

The PACE Coalition, to which the National Association of Manufacturers belongs, wrote a letter to the Senate objecting to the $9.6 billion in tax increases included in the bill that Hoyer praises. Excerpt:

U.S. tax law already disadvantages worldwide American companies and their employees. U.S. companies face the second highest corporate tax rate among developed countries and an international tax system that impedes the ability of U.S. companies to expand into new markets and reinvest foreign earnings at home. The $9.6 billion in proposed international tax increases in this bill would further disadvantage U.S. companies—harming their competitiveness and reducing the earnings U.S. companies bring back from their foreign operations, thereby reducing reinvestment in U.S. plant and equipment, funding U.S. research, and expanding U.S. payrolls.

At a time when other countries are taking steps to attract business, this legislation sends exactly the opposite message, with the effect of discouraging business investment and job creation in the United States.

Politicians are talking a lot about promoting U.S. manufacturing these days, but the message is getting seriously muddled with anti-corporate invective: “Manufacturing is critically important to the U.S. economy. We believe in manufacturing. We stand ready to support you, you greedy exploiters of the American people.”

Earlier posts on corporate taxation, “loopholes” and anti-business rhetoric.

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