Video: How U.S. Corporations Can Win at Home and Abroad

U.S. Corporations Need to Be Competitive at Home and Abroad

Washington, DC, February 21, 2012—Raising taxes on U.S. corporations with operations abroad will not help create jobs, but will only succeed in making American companies less competitive overall which means fewer jobs at home, according to a new video from the Tax Foundation.

"Prominent politicians, including President Obama, have suggested that companies that 'ship jobs overseas' should be subjected to higher corporate tax rates, but that characterization fundamentally misstates how the modern business world functions," said Tax Foundation president Scott Hodge.

Over the next five years, the global economy is expected to expand by over $21 trillion, with 85% of that demand for new goods and services occurring in countries outside the U.S. When American corporations compete for that new business, some companies will make products here and ship them to customers overseas, but for others, the best way to win new business will to make their products as close to their overseas customers as possible.

"Serving international customers means understanding market conditions all over the world – because even in a global economy, all business is local," said Hodge.

When U.S. companies expand overseas, some in Washington worry that American jobs are left behind here at home. In reality, however, when American companies are successful abroad, it means more opportunities for American workers.

The more people a U.S. company employs abroad, the more skilled workers they need here in America. A growing international firm is going to need more employees providing manufacturing inputs, management expertise, research and development, and cultivating other abilities.

Unfortunately American companies looking to compete overseas are at a disadvantage because of the U.S. corporate tax rate, the second highest in the world at 35%. That burden makes American products less competitive, no matter where they are made.

"Punishing successful companies for serving their international customers will not bring jobs homes to the U.S," said Hodge. "Trying to force businesses to abandon their operations overseas will simply result in fewer successful American companies. As the video says, we can’t win here if we don’t win there."

Watch the full 4-video series on YouTube.

Script: "Corporate Taxes: Winning"

There are more than 7 billion people on earth.

That’s over 7 billion people who need stuff.

Stuff, like cell phones, computers, shampoo and bottled water.

Some estimate that all this new stuff will mean more than $21 trillion in new business over the next five years.

85% of that new demand will occur outside the US in fast-growing countries. [Source: The International Monetary Fund, 2011]

And, of course, there are a lot of companies around the world competing for that new business.

Now, to try and get some of that business, some American companies will make stuff here and ship it to customers overseas.

But for other American companies, the best way to win new business is to make stuff as close to their customers as possible, because even in a global economy all business is local.

Some in Washington worry that when American companies make stuff abroad, it costs jobs here at home.

But the truth is, when American companies succeed overseas, it means MORE work here at home.

You see, for every worker that a US company has abroad, they need plenty of skilled people back here in America.

Like scientists, factory workers, engineers, and programmers.

But, unfortunately American companies looking to compete overseas are at a disadvantage because of our tax rate.

U.S. companies are burdened with one of the highest corporate tax rates in the world at 35 percent.

This means American products are less competitive – no matter where they are made.

And since our competitors make their own products near those same customers, AND pay a lower tax rate, we struggle to compete.

Now some suggest that raising taxes on American companies that make products overseas will bring jobs back home, especially if we also lower taxes here.

But raising taxes on foreign sales will only make American products even less competitive.
And that means FEWER jobs here at home.

That’s bad news for the American scientists, factory workers, and engineers whose jobs depend on selling to customers all around the world.

So if we want to sell American products, supported by American workers, to those 7 billion people, we have to have a competitive tax system.

Because we can't win here if we don't win there.

For more information go to Tax Foundation dot org.

The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or morrison@taxfoundation.org.