Mitt Romney’s misleading auto bailout ads that hit Ohio this week touted his plan to help the auto industry, even though no specific plan was mentioned, no plan exists on his web site, and his presidential campaign did not respond to requests from reporters when asked about the plan.
Writing on Romney’s campaign web site, ex-Chrysler chairman and Romney endorser Lee Iacocca has now laid out Romney’s plan to help the auto industry: it’s a massive corporate tax break that will make it easier for businesses to offshore their profits.
When Mitt Romney is president, he will reduce our nation’s corporate tax rate to 25 percent from 35 percent — currently the highest combined tax rate in the industrial world — so that American car companies can compete on a level playing field at home and abroad. He will also stop the extra tax automakers are forced to pay when they want to bring home their profits to reinvest in the United States. President Obama could have done this the day he took office since his party controlled both houses of Congress, but he chose not to. [my emphasis]
Steven Rattner, Treasury’s lead adviser during the auto rescue, said on a conference call today that he would “take issue” with the idea that auto companies need tax breaks. “I’m not sure what Lee Iacocca is talking about,” Rattner said. “The least of the industry’s problems has been taxes. When you lose as much money as they lost, you don’t pay taxes and you often don’t pay them for a very long time. That’s not the industry’s problem.”
Romney’s plan, at a cost of more than $1 trillion, wouldn’t help the American economy or auto workers if history is any guide. The amount the U.S. actually collects from corporations is among the lowest in the developed world. And if the U.S. is failing to remain competitive with the rest of the world, its auto companies haven’t noticed: American auto companies are thriving at home.
The plan to eliminate the tax on repatriated profits — those earned overseas and returned to the U.S. — surely won’t help auto workers. George W. Bush’s repatriation tax failed to spark economic and job growth, and many of the companies that lobbied for it ended up cutting jobs and stashing even more money overseas in its wake.
While Romney is falsely attacking Chrysler and General Motors for moving auto jobs to China, his plan for the corporate tax system would make it even easier for them to do so. Romney’s shift to a territorial tax system would add incentives for corporations to outsource jobs and offshore profits, and one study estimates that it would lead to the creation of 800,000 overseas jobs at the expense of American workers.