Mitt Romney's plan not to force companies to pay taxes on profits they bring back from overseas will eliminate jobs, according to a new report by the Center for American Progress Action Fund.
That's because Romney's tax plan includes eliminating the Repatriation Tax, which applies to corporations that try to bring profits made overseas back into the country, according to Bloomberg. Most multinationals find loopholes that prevent them from paying the full tax, according to CAP. That increases incentives for businesses to do more business, or store more profits, overseas.
Between 1999 and 2010, U.S. corporations eliminated 1 million jobs at home while creating 3 million jobs abroad. Romney's plan to eliminate the Repatriation Tax altogether would simply exacerbate the problem, CAP argues.
The tax incentives included in such a system would encourage corporations to shift more of their investments and operations overseas, costing America as many as 800,000 jobs, according to Reed College economist Kimberly Clausing. Combine that part of the plan with his idea to lower corporate tax rates to 25 percent, and it altogether could cost the U.S. Treasury more than $1 trillion, the report estimates.
Romney's plan wouldn't be the first time lawmakers have given multinational corporations a break on their repatriated profits.
In 2004, the U.S. Congress approved a tax holiday, which cut the Repatriation Tax to 5 percent, The Wall Street Journal reports. During this tax holiday, multinationals brought 90-100 percent of their overseas cash earnings back to the U.S. Still, the tax holiday did little to spur job growth.