Wednesday, September 08, 2004

Kerry's False Accusations Regarding Incentives and Outsourcing

Kerry, in his ads and his speeches, is saying that Bush's policies provide "tax incentives" for companies that outsource jobs overseas. This is patently false. The current tax code works like this: Companies, both international and domestic, pay taxes on revenues earned inside the United States. Money earned by those companies in OTHER countries is not taxed in America. And why should it be? It wasn't earned here and it was already taxed in the other country. Kerry says this is an INCENTIVE for companies to move jobs overseas. False. A lack of disincentive is not the same thing as an incentive.

Kerry's plan is to ad disincentives to these companies that outsource, not eliminate some tax loophole that exists presently. He would double tax the companies. Profits earned on foriegn soil would be taxed just like profits earned here. Additionally, the company would still have to pay the foriegn taxes.

Here are the negative reprocussions of the Kerry plan: Companies will incur higher costs. To combat the higher costs, prices will be raised. The consumer will be hurt both by having to pay a higher price and by having to forgo some purchases due to the higher price. The company will be hurt because the higher price will cause sales to drop. Additionally, any time a tax is put into place, a dead-weight loss is created whereby money in the economy is destroyed. Kerry's plan is terrible and would only hurt our country.


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