A tax law written during the Kennedy years is to blame for a large portion of jobs leaving US soil. That law was put into effect during the Cold War, to encourage investment abroad, and project American influence, all in an effort to combat Communism internationally. In essence, the law states that corporations who create jobs overseas will not be taxed on earnings that stay overseas.
Immediately, one can observe that this type of tax law will hurt the American economy in two ways; the first is loss of jobs, while the money that stays overseas is neither taxed, nor introduced into the economy. Corporations all across America face tough decisions. Stay here and provide jobs for the local economy, or go abroad and take advantage of the incentive the Federal Government gives for doing so?
To put it bluntly, our Federal Government uses working American citizens to subsidize this tax incentive for companies who create jobs…overseas.
In other words, you and I are paying for GE or Nike to layoff American workers so they can build a plant in another country and hire foreign workers. This tax law has become sort of a rallying cry every election season. Both parties realize it’s a hot topic; has been for nearly thirty years. Both Republicans and Democrats immediately ignore this tax law the moment elections are over, and we don’t hear about it for another four years.
And why should Republicans or Democrats care? Why should they change a tax law when they know that the moment they do, the lobbyists who contribute so prolifically to their party coffers will close their wallets? Lest you think the blame lies with one party or another, please understand that both parties have had ample opportunity to change this law, and both have ignored it completely. They instead choose to use it as political capital; buying votes with it, because it sounds so good in the campaign slogans we hear every election.
There’s only one fix to this problem; change the tax laws so that all overseas income is taxed at the same rate as domestic income. If this does not occur, jobs will continue to leave our economy, and Americans will continue to subsidize their own layoffs.
The Cold War is over. Everybody lost; but none more than the everyday American citizen, who continue to foot the bill for a shortsighted tax law that only ever created another loophole for corporations to jump through.
If John McCain or Barrack Obama really cared about the economy, if they are serious about reform, they can start with this one, and they start immediately. Why wait until after the elections?
The answer is simple; wait and wait and wait because the longer they do, the less likely it is they will have to do anything. Remember, Washington allows lobbyists inside the offices of your elected officials, and so long as they do, this tax law might never change. Both parties have too much to lose, namely in the form of contributions from those same lobbyists.
But we can do something about it. We can write or call our Senator, and insist they change this silly tax law. We can demand that corporations who move jobs overseas are no longer subsidized by American Citizens. We can change this, and we must, if our economy is become strong again, and if Americans are to see any real tax relief.
It’s fine and wonderful to talk about tax cuts for every American Citizen. But those tax cuts are just a red herring. They don’t really exist, because every penny of those cuts is swallowed up by the loss of jobs, and tax rates that skyrocket because less and less money is available for taxation from corporations.
Senators Obama and McCain know this. They’ve talked about it on the campaign trail. It’s our duty, to ourselves and to country, to force them to change it.
