Bloomberg is reporting that multi-national corporations are lying on their tax returns or using highly abusive practices and shifting income that was really earned in the United States to lower cost countries and dodging more than $60 billion in taxes a year, which is money that has to be covered by individual taxpayers and small businesses.
The problem is that the proposed solution could lead to higher outsourced jobs, especially lucrative high-tech, high-paying jobs:
Doggett has proposed legislation that seeks to curtail that practice. It would require companies to be liable for U.S. taxes resulting from innovations they developed in the U.S., even if the company licensed the property to an overseas subsidiary.
Well, if I'm an executive at a huge multi-national, what am I going to do? Just move the development lab from Silicon Valley to Hong Kong or some offshore haven. It doesn't take more than three seconds to see that this "solution" would cause even more problems! Then, you wouldn't have the income tax the high-paid researchers and developers were paying and you have fewer jobs for Americans. Is it really that difficult?
There must be a better solution, especially when you consider that the 35% tax rate we charge corporations is the second highest in the world! Of course companies are going to try and lower it. Maybe they would dance less if we were competitive in our rates. But no, that makes too much sense. You can read the entire article here.