Provides a Financial Incentive to Move Jobs Overseas

How to Rig an Economy


There was so much talk during the 2016 campaign about American companies shipping jobs overseas. As there should have been – it’s a real problem, and it needs to be addressed. But this new Republican tax code doesn’t just fail to fix it – it actually makes things worse.

This sounds almost too ridiculous to be true, but I promise you it’s cold, hard fact – the new Republican tax code actually gives corporations a financial incentive to move your job out of the country. It gives them a tax cut to take American jobs and ship them overseas.

Until recently corporations paid the same tax rate on all the profits they made around the world, no matter where they earned that money. They got to subtract the amount of taxes they paid to other countries from that total, but overall, they were supposed to pay the same rate at the end of the day on foreign profits as they pay on profits earned in the United States.

The new Republican tax code changes that. It lets corporations pay just about half the normal tax rate on income they earn overseas as compared to what they make in America. 10.5% compared to 20%.

This means that if a company has a factory in the US and a factory in India, and both make the exact same amount of profits, the taxes on the Indian earnings are just half what they are on the American profits. Not only that, because they can still subtract whatever the pay in foreign taxes from their American tax bill, they’re probably not going to have to pay any US taxes at all!

Patriotic Millionaire TJ Zlotnitsky speaks at a 10,000 person rally in Chicago

Sounds like a pretty powerful incentive to move American factories overseas, right? That’s not even the bad part, it gets so much worse.

The new law actually has a specific rule that gives even more tax breaks to companies with plants and manufacturing facilities in other countries. Under the new law, the more factories a company has overseas, the less they pay in taxes! If that isn’t a strong incentive to shut down American factories and move them overseas, then I don’t know what is.

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