Drudge is having fun with this but I think there’s less to it than meets the eye. Is Crazy Joe really calling for some sort of new global tax authority right before a presidential election, knowing that the GOP can exploit that in its campaign messaging in a thousand different ways? He is kind of a moron, but he’s not that much of a moron. Remember, the “global minimum tax” has come up before: Last month Gene Sperling, the director of O’s National Economic Council, mentioned it and it sent a shiver through the righty blogosphere then, too. But they’re not talking about creating some sort of new tax agency here. They’re talking about tweaking the U.S. tax code so that American companies have less incentive to outsource. Said a White House official of Sperling’s remarks at the time, “He was referring to our proposal in the Blueprint for an America Built to Last that removes tax incentives for companies that ship jobs overseas.” Here’s the relevant section from the White House fact sheet:
At the same time as the President is calling for immediate enactment of this plan, he is also pushing forward on a framework for corporate tax reform that would encourage even greater investment in the United States, while eliminating tax advantages for outsourcing. This framework will include:
o Making companies pay a minimum tax for profits and jobs overseas and investing the savings in cutting taxes here at home, especially for manufacturing: The President is proposing to eliminate tax incentives to ship jobs offshore by ensuring that all American companies pay a minimum tax on their overseas profits, preventing other countries from attracting American business through unusually low tax rates. The savings would be invested in cutting taxes here at home, especially for manufacturing.
There’s no foreign agency involved. It’s just a new tool for the IRS to reach an American company’s profits no matter where in the world they might be invested. In theory, that’ll eliminate the competitive advantage other nations have over the U.S. by undercutting our corporate tax rates. In practice, it could lead to more American corporations being sold to foreign investors: Because the U.S. only taxes the profits of U.S. companies, one way to dodge the new “global minimum tax” would be to invite a takeover by a foreign company. Which, depending upon how high the new minimum tax is and how many companies flee, could mean less overall tax revenue than before. But then, what’s another $100 billion in the hole when you’re already running deficits in the trillions? Click the image to watch.
Update: Romney unloads:
“Raising taxes on American job creators is apparently not enough to satisfy President’s Obama’s trillion-dollar spending addiction. Instead of promoting pro-growth tax policies that provide businesses with the economic freedom to grow and prosper, he is backing a ‘global tax’ that would harm American competitiveness,” Romney said in a statement released by the campaign. “My plan to reform the tax code by cutting rates and encouraging reinvestment here in America is the right way to jumpstart an economic recovery and create new American jobs.”
He’s betting that tax cuts, by attracting more business, would actually end up raising more revenue for Treasury than the “global minimum tax” would. Belated exit question: How bad does the White House have to be at “branding” to have approved a term like “global minimum tax”? Good lord. Hire a professional, guys.