May 13, 2009
What is Tax Deferral? New Tax Foundation Video Aims to Educate Public About Critical Issue Involving America’s Global Economic Competitiveness
With President Obama recently proposing to raise more than $100 billion in new tax revenues from U.S. businesses by restricting their ability to defer paying taxes on profits earned abroad, the Tax Foundation today released a two minute video on YouTube aimed at educating the public about tax deferral and how it impacts America's global economic competitiveness.
The video, "What is Tax Deferral," was created by Craig Kirchoff of Alexandria, VA, a winner in the Tax Foundation's CompeteUSA YouTube Contest held last October. It tells the story of a U.S. business and a German business competing and selling in a foreign country, and how deferral - the feature of the U.S. corporate tax that is under attack by the Obama Administration - helps place the operations of U.S. businesses on a more equal footing with foreign businesses operating in the same country.
In a recent statement, Tax Foundation senior research fellow Robert Carroll, Ph.D., points out that the real problem the U.S. faces is a tax system is increasingly out-of-line internationally. The U.S. now has the second highest corporate tax rate, and other measures of corporate tax rates show the same downward trend in corporate tax rates abroad.
"Without deferral, U.S. companies would be less, not more competitive," Carroll argues. "It will penalize the foreign operations of U.S. companies operating abroad and make it more difficult for them to compete with foreign companies."
The premise behind the proposal is that by raising the taxes paid on the foreign profits of U.S. companies' earned abroad, the companies will somehow have more incentive to locate their operations here in the United States. But as Tax Foundation president Scott Hodge points out, raising the tax burden on American businesses will ultimately impact American families through lower wages and higher prices at the store.
"Most people think that corporate income taxes are paid by wealthy, anonymous companies," Hodge says. "But as economists have been teaching for years, people bear the burden of corporate taxes, not companies."
The new video can be found at: http://www.youtube.com/watch?v=hapfclt6mFY. It can also be found at the Tax Foundation's YouTube page: http://www.youtube.com/taxfoundation.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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To schedule an interview, please contact Matt Moon, the Tax Foundation's Manager of Media Relations, at (202) 464-5102.
