Mitt Romney's proposal to stop taxing corporate overseas profits may create jobs, just not here, according to a new report.
The Republican presidential candidate's proposal to eliminate the repatriation tax, which requires companies to pay taxes on the overseas profits they bring back to the country, will lead to the creation of 800,000 jobs overseas, Reed College economist Kimberly Clausing estimates. The incentive for multinational corporations to locate jobs in low tax havens will likely be too great to ignore, she says. Canada, Germany, China and Singapore are among the ten countries that would most profit, the report found.
It should be noted that the report's findings are based on a number of assumptions. For instance, Clausing's estimates are based on the idea that the U.S. effective corporate tax rate would remain roughly the same. The report also notes that foreign effective tax rates have been decreasing since 2008, which would increase the estimated jobs created elsewhere.
And, as the Tax Foundation argues, the creation of jobs abroad does not mean that jobs in the U.S. would necessarily be outsourced.
Since the report's release, Clausing has faced scrutiny from conservative media outlets, such as The Weekly Standard, who criticize the Harvard Ph.D., once an economist for the Council of Economic Advisers, for making campaign contributions to President Obama's reelection campaign. For its part, the Obama reelection campaign has cited Clausing's work, according to The Hill.
While she has confirmed that she had made several small contributions to the president, Clausing told OPB News that fellow academics have been very supportive:
"The academic community is quite civilized in terms of dialogue. I have a co-author, for instance, that I work with on international tax papers, and his perspective on a territorial tax system, which is the one that I wrote about, is somewhat different than mine. But he's very supportive of the approach that I've taken in my research and the general integrity of my work. I think academics in general tend to be kind and understanding of the kind of media attention that academic studies fall under."
Below are 10 countries that would benefit from Romney's tax plan:
Total Number of Jobs Created Abroad With Romney's Tax Plan
Approximately 800,000 Jobs