This week yet another corporate leader explained clearly and precisely how the U.S. corporate tax system is driving investment overseas and leading U.S. companies to create jobs elsewhere.
Muhtar Kent, the chief executive of Coca-Cola, said that other countries are “fighting for investment with each other,” while in the U.S. “we’re forgetting what really worked 20 years ago.”
Mr. Kent went on to say, “In China and other markets around the world, you see the kind of attention to detail about how business works and how business creates employment.,” and he claimed, “an antiquated tax structure as one of the reasons its [i.e., Coca-Cola’s] home market has become less competitive,” according to the Financial Times.
Here’s more of the story from the FT:
- “I believe the US owes itself to create a 21st century tax policy for individuals as well as businesses,” he said.
Mr Kent, speaking on the sidelines of the Clinton Global Initiative conference, hit out specifically at US provisions that tax companies for repatriating cash earned overseas. Coke does not disclose how much cash it holds overseas.
“If you talk about an American company doing business in the world today with its Chinese, Russian, European or Japanese counterparts, of course we’re disadvantaged,” Mr Kent said. “A Chinese or Swiss company can do whatever it wants with those funds [earned overseas]. When we want to bring them back, we are faced with a very large tax burden.”
It’s long past time for policymakers to come to terms with how much of our economic problems are self-inflicted. Until we can completely reform our corporate tax regime, which must include bringing the corporate tax rate down to around 20 percent, the U.S. should immediately allow penalty-free repatriation of U.S. corporate profits held overseas.
Instead of the Federal Reserve printing more money, why not bring home the billions in U.S. dollars trapped overseas by our self-destructive corporate tax laws and put that money to work here?