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Buffett and many other investors believe that if companies are allowed to repatriate money tax-free or at very low rates, it will only speed the pace of outsourcing. If you could make money in high-growth, low-tax locations, bring it home for free and send it right back out, why wouldn't you? Reed College economics professor Kimberly Clausing estimates that moving to a territorial system would send another 800,000 U.S. jobs abroad.
Many of the companies arguing for this, by the way, already pay the lowest average tax rates globally. These include Big Tech, Big Pharma and financial firms, all of whose wealth is based largely in intangible and easily movable assets like intellectual property. And most of these companies haven't created any new jobs on net in the U.S. since the 1980s, according to a report by Nobel laureate Michael Spence for the Council on Foreign Relations.
Bottom line: job creation in the U.S. isn't about tax rates. It's about strengthening the underlying growth environment, which could be done in a variety of ways, from improving infrastructure and education to launching a more cohesive national strategy to support strategically important industries like high-end manufacturing, à la China and Germany. Yes, we should streamline our tax code, close loopholes and slightly lower our corporate rate to put it in the midzone of the global range. But we should not allow companies to bring money in from abroad tax-free--or we'll be setting the stage for yet another stimulus measure that benefits those who need it the least.