Fact Check: Romney’s ‘territorial’ tax system

October 16, 2012

The president said that Romney wants to expand tax breaks for companies that move overseas and essentially enact a policy that says, “If you invest overseas, you don’t have to pay U.S. taxes.”

Obama was referring to Romney’s proposal to enact a "territorial tax" system that would allow U.S.-based companies to bring foreign-earned profits back to the U.S. without paying taxes. The idea is that those businesses will otherwise keep the foreign-earned money overseas to avoid paying additional taxes, and the funds end up having no domestic benefit.
The bipartisan Simpson-Bowles Commission recommended that the government adopt a territorial tax system “to help put the U.S. system in line with other countries.”

Obama has proposed something else: A minimum tax on U.S. companies based overseas that would require those businesses to make up the difference between the foreign tax rate and the U.S. rate. The idea behind that plan is that it will discourage corporations from moving operations overseas to avoid taxes.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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Glenn Kessler · October 16, 2012