President Obama wants to close accounting loopholes for corporations that set up “tax havens” abroad.
But don’t be fooled into thinking that this is a particularly significant development in the struggle to protect American jobs — let alone to expand manufacturing and service industries in the United States.
The “tax haven” complaint has long been a favorite of politicians at election time. Even conservative Republicans, when they find themselves facing populist turmoil at home, ramp up the rhetoric about curbing the creative bookkeeping of US corporations. It’s an easy applause line that appears to address offshoring in a meaningful way. But the key word here is “appears.”
It was not just Obama who said during the course of the 2008 campaign that he wanted to end tax breaks “for companies that ship jobs overseas.” Congressman Paul Ryan, the Wisconsin Republican who has emerged as the leading congressional critic of Obama’s economic policies, spent roughly $1 million on television ads that featured Ryan declaring it to be “unfair” for American companies to get tax breaks by producing goods elsewhere and then importing them to the US. “Instead of exporting jobs,” Ryan asserted, “we should be exporting American products.”
Don’t count on Ryan, whose economic hypocrisy has been well confirmed by now, to stick to his campaign-season stance. And don’t be satisfied if Obama makes tax-haven tinkering the central theme of his struggle to address offshoring.
Corporate tax breaks are just icing on the policy cake for US corporations that are in the business of shutting factories and laying off workers in this country and moving them elsewhere. Offshoring is driven, in large part, by bad trade policies and, increasingly, by bad bailout policies. So far, Obama and his aides have sent mixed signals about the administration’s willingness to alter those trade policies.
And the president’s bailout policies are actually promoting offshoring. For instance, the Chrysler bailout, which the president has been hailing as an important step toward stabilizing the US auto industry, actually helps the the “new Chrysler” — which will presumably emerge from bankruptcy proceedings — to shutter plants in the US and open them in Mexico.
Make no mistake: It is good to curb offshore tax havens and corporate tax breaks.
But if President Obama wants to get serious about job retention and job creation in the United States, he should get serious about changing our failed free-trade policies — which encourage US corporations to move plants from country-to-country in a race-to-the-bottom search for low wages and lax regulations — and bar the payment of billion-dollar bailouts to companies that are shutting US factories and moving work abroad.