U.S. multinational companies eliminated 2.9 million jobs in the United States and added 2.4 million jobs some place else over the past decade, according to data (pdf) released by the Department of Commerce on Monday.
In 1999, U.S. multinationals employed 24 million people in the U.S. and 7.9 million people internationally. By 2009, U.S. multinationals' employees in the U.S. dropped to 21.1 million people, while their ranks of international employees grew to 10.3 million people. Quite a difference from the 1990s, when U.S. multinationals added 4.4 million jobs in America and 2.7 million jobs elsewhere.
The employment totals released by the Commerce Department "mask significant differences among the big companies," the Wall Street Journal notes. "Some are shrinking employment at home and abroad while increasing productivity. Others are hiring everywhere. Still others are cutting jobs at home while adding them abroad."
Still, "the data also underscore the vulnerability of the U.S. economy, particularly at a time when unemployment is high and wages aren't rising. Jobs at multinationals tend to pay above-average wages and, for decades, sustained the American middle class." It seems obvious: the fewer good-paying jobs there are, the smaller the American middle class becomes.
Some on the left view the job trend as reason for the U.S. government to keep companies from easily exporting work overseas and importing products back to the U.S. or to more aggressively match job-creating policies used in some foreign markets. More business-friendly analysts view the same data as the sign that the U.S. may be losing its appeal as a place for big companies to invest and hire.
That being a quote in the WSJ, means the entire article will focus on "business-friendly analysts" views such as Matthew Slaughter, who was an economic advisor to George W. Bush. "They warn that a combination of the U.S. tax code, the declining state of U.S. infrastructure, the quality of the country's education system and barriers to the immigration of skilled workers may be making the U.S. less attractive to multinationals."
Let me skip over tax cuts, the Republicans' silver bullet to all woes, for a moment. Now we could put Americans back to work by fixing our crumbling infrastructure and building or improving the high speed rail system, but Republicans, such as the governors of Florida, Ohio, New Jersey, and Wisconsin, see such things as investments we cannot afford. We could improve our education system by hiring more teachers and properly funding public school education, but instead Republicans and others are attacking teacher unions and defunding public schools.
No Republican solution would be complete without the magic pixie dust they call tax cuts. The problem is, there is now bipartisan support building for slicing the corporate tax rate, according to the Los Angeles Times.
U.S. corporations have enjoyed a two-year bull run on Wall Street. They are sitting on a record amount of cash and are back to paying bonuses that are the envy of executives around the world. And the icing on the cake for many of them might be just around the corner: a tax cut that has bipartisan support in Congress.
While U.S. corporations are busy shrinking the U.S. middle class, their executives are having their cake and licking the icing. Corporate lobbyists are orchestrating a move to cut their taxes to make them "more competitive with their foreign counterparts". Republicans want to slash the corporate tax rate from its current token 35 percent to 25 percent. The Obama administration and some Democrats are seeking to trim the corporate tax rate too.
"Overall, companies will pay $191 billion in U.S. corporate income taxes in 2010." While an estimated $124 billion in corporate welfare or "tax breaks" as companies prefer to call it, will be handed out in 2010 according to Senate Budget Committee estimates. Each percentage-point reduction in the "corporate tax rate could cost $8 billion or more a year in foregone revenue to the Treasury, according to the congressional Joint Committee on Taxation," Bloomberg reported.
In 1952, nearly a third of all federal taxes were paid by corporations. Just 8.9 percent of the federal tax base was paid by corporations in 2009, the LAT reports. "The top tax rate for corporations has dropped from 52% in 1952 to 35% today. That has led corporate taxes as a share of U.S. economic output to decrease from 6.1% in 1952 to 1.3% last year."
President Obama said in the 2011 State of the Union Address, that he wants to simplify the tax system and "get rid of the loopholes". Then "use the savings to lower the corporate tax rate for the first time in 25 years — without adding to our deficit." However, as the LAT notes:
Neither House Republicans nor the White House has said which tax breaks they would ax so their plans remain "revenue neutral" and don't add to the budget deficit. They've been clear they don't want to eliminate all of them. In fact, the Obama administration has pushed for increasing the corporate research and development tax credit.
Eliminating any tax breaks will be difficult because corporate lobbyists are expected to fight hard to keep breaks that benefit their companies. But the push begun by the Obama administration for revenue-neutral corporate tax reform hasn't pleased some liberals. They want the loopholes removed, but want the savings to go toward reducing the budget deficit, not the corporate tax rate.
Yes, the federal deficit. The excuse being used to destroy the few bits of social safety net remaining in the U.S. The safety net that the Americans being squeezed out of the middle class are depending on to make ends meet during the Great Recession. Congress is telling us that Americans must sacrifice so corporations can continue to move their jobs elsewhere and pay for their corporate tax cuts.