Today, John McCain is in Ottawa, Canada, speaking to the Ottawa economic club to affirm his support for free trade and reassure them that his economic plan would be good for Canada.
But McCain neglected to mention that he opposes a key way to encourage investment (and, therefore, jobs) in the United States: eliminating the tax incentives for companies to keep profits overseas instead of reinvesting them in the United States.
By leaving profits overseas, U.S. companies can indefinitely postpone (i.e. totally avoid) paying U.S. corporate taxes.
As Martin Sullivan of Tax Notes writes, “The U.S. tax system does provide an incentive to locate production offshore.”
McCain adviser Carly Fiorina, former CEO of Hewlett-Packard, is well acquainted with this fact. At Hewlett Packard, Fiorina oversaw the sheltering of over $14 billion in profits overseas, bringing the companies effective tax rate down from 35% to 12%.
At a recent McCain economic event, Fiorina acknowledged the tax incentives to move offshore and explained that Hewlett Packard “left billions of dollars in cash overseas.”
In fact, Fiorina, has shown a consistent callousness towards Americans who have lost their jobs through outsourcing and offshoring:
— During her time as CEO, Fiorina was an outspoken defender of Hewlett-Packard’s offshoring, referring to it as “right-shoring.”
— In 2004, Carly Fiorina gave a speech in which she said, “there is no job that is America’s God-given right anymore.”
This callousness extends to McCain’s policies. Even as McCain opposes eliminating these incentives (which would encourage the creation of American jobs), he advocates a $175 billion tax cut for corporations and a expensing deduction called “the mother of all corporate loopholes.”
Fiorina, speaking for the campaign, has insisted that eliminating these incentives is unnecessary if the corporate rate is cut from 35% to 25% as McCain proposes, but, as George Stephanopolous neatly pointed out during an interview with Fiorina, this argument is absurd on its face: corporations face zero taxes if they leave their profits overseas, and 25% is still a whole lot bigger than zero.
In an op-ed in the Detroit Free Press, McCain wrote, “those who would lead our countries must work to ensure that the benefits of NAFTA are understood throughout our countries.”
Perhaps it’s time McCain made his continued desire to put corporate profits ahead of American jobs “understood throughout our countries” too.