"Romney Has ‘No Idea’ About Outsourcing Tax Breaks, But His Economic Plan Makes Them Worse"
Our guest blogger is David Abromowitz, a senior fellow at the Center for American Progress Action Fund.
Of all the many claims that Mitt Romney pitched to the American public with such confidence that most viewers declared him the “winner” during Wednesday night’s debate, few were as brashly misleading as his response to the President’s objection to tax breaks that enable outsourcing jobs overseas. “Look, I’ve been in business for 25 years. I have no idea what you’re talking about. I maybe need to get a new accountant,” Romney said. “But the idea that you get a break for shipping jobs overseas is simply not the case.”
But even Fox News acknowledges that “companies can claim a deduction for the costs associated with moving jobs overseas.” The idea that former Bain CEO Romney wouldn’t know this is simply not believable. Instead, his advisers have argued that this isn’t a “special” tax break for outsourcing — it’s just a deduction like any other cost of doing business.
But beyond any semantic argument, Romney certainly would know that just this summer, Republicans in the Senate (with three exceptions) blocked a bill to eliminate this deduction when the expenses are for relocating jobs out of the US. As ABC New reported, “Under existing law, employers may take tax deductions for the costs associated with moving jobs out of the country. The proposed legislation would have eliminated that, and used the resulting new revenue to fund a 20 percent tax credit for the costs companies run up ‘insourcing’ labor back into the U.S.”
The biggest rebuttal to Romney’s claim of not having a clue of what the President was talking about, however, is Romney’s own tax plan. It actually includes a far more favorable tax break that would increase incentives for American companies to move operations overseas. As the Center for American Progress Action Fund’s Seth Hanlon has explained in detail, Romney’s tax plan “pledges to move the United States toward a ‘territorial’ tax system. What this means is that instead of paying a deferred tax on their foreign profits, U.S. corporations would pay no U.S. tax. Exempting overseas profits from tax would be a tax cut for multinational corporations of $130 billion over 10 years.”