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GLARING OMISSION #23: Obama’s Own Jobs Council And The Fiscal Commission Recommended Moving To A Territorial Corporate Tax System

- September 7, 2012

THE GLARING OMISSION: Biden Says That A Territorial Corporate Tax System Would Ship Jobs Overseas

THE TRUTH: Obama’s Own Jobs Council And Fiscal Commission Recommended Moving To A Territorial Tax System To Make American Businesses More Competitive

Obama’s Own Jobs Council Proposed Moving To A Territorial Tax System “In Order To Make America More Competitive In Global Markets” Rather Than Taxing Foreign Profits. “Many Council members agree that the U.S. should shift to a territorial system of taxation in order to make America more competitive in global markets. While most other developed nations have adopted territorial systems that exempt most or all foreign income from taxes when they are repatriated, the U.S. subjects all worldwide earnings to the corporate income tax when they are brought home to the U.S. This approach actually encourages U.S. companies to keep their earnings abroad rather than investing them here at home. Adopting a territorial tax system would bring us in line with our trading partners and would eliminate the so-called ‘lock-out’ effect in the current worldwide system of taxation that discourages repatriation and investment of the foreign earnings of American companies in the U.S.” (“Reform The Outdated Tax System To Enhance American Competitiveness,” The Jobs Council, Accessed 9/6/12)

Obama’s Fiscal Commission Recommended A Territorial Corporate Tax System Where Most Or All Foreign Profits Are Not Taxed. “Move to a competitive territorial tax system. To bring the U.S. system more in line with our international trading partners’, we recommend changing the way we tax foreign-source income by moving to a territorial system. Under such a system, income earned by foreign subsidiaries and branch operations (e.g., a foreign-owned company with a subsidiary operating in the United States) is exempt from their country’s domestic corporate income tax. Therefore, under a territorial system, most or all of the foreign profits are not subject to domestic tax. The taxation of passive foreign-source income would not change.” (“Moment Of Truth: The Report Of The National Commission On Fiscal Responsibility And Reform,” The National Commission On Fiscal Responsibility And Reform, 12/1/10)

  • Rather Than Punishing Multinationals, Obama’s Fiscal Commission Said That Corporate Tax Reform Should “Help U.S.-Based Multinationals Compete Abroad In Active Foreign Operations.” “Make America the best place to start a business and create jobs. The current tax code saps the competitiveness of U.S. companies. Tax reform should make the United States the best place for starting and building businesses. Additionally, the tax code should help U.S.-based multinationals compete abroad in active foreign operations and in acquiring foreign businesses.” (“Moment Of Truth: The Report Of The National Commission On Fiscal Responsibility And Reform,” The National Commission On Fiscal Responsibility And Reform, 12/1/10)

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