Letter to the Editor

Foreign tax reform plan for multinationals no winner

Granted, Lawrence Summers is smarter than I am, but I don’t understand why his proposal to reform taxes [“Win-win tax reform,” op-ed, July 8] by lowering the tax rate on foreign earnings to 15 percent doesn’t continue to discriminate against domestic companies that have to pay more than twice that rate. If we want to create more jobs and income here in the United States, why continue a tax system that encourages the export of jobs and profits?

Even though Mr. Summers’s proposal would lower the incentive to export jobs and profits, it would still encourage any business looking to cut its tax rate to do so. Multinational corporations are called multinational for a reason. They will invest wherever they can make the most money.

If we were serious about eliminating incentives to export jobs and profits, we would treat the foreign income of a U.S. corporation as if it were earned in the United States and allow a credit against foreign taxes actually paid. Alternatively, we could go to a formulary apportionment system, which the U.S. Supreme Court has ruled constitutional, to allocate taxable income.

Martin Lobel, Washington

 
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