The Center on Budget and Policy priorities has released a new report on the impacts of changing our corporate tax code to a territorial system. The switch would create a number of major problems (including offshored jobs and reduced wages) and would effectively be a way for multinational corporations to get out of paying their fair share:
A territorial tax system would provide tax cuts to large U.S.-based multinational corporations, particularly those that can most aggressively move their profits and investments offshore. The current U.S. tax code already favors foreign over domestic investment, and a territorial system would create still more incentives for large multinationals to move operations and profits overseas. Among the risks, real U.S. wages could fall, federal budget deficits could rise, and tax burdens on domestic companies could increase. Meanwhile, the economic benefits that proponents of a territorial system promise would not likely materialize.
The proposed switch to a territorial system would be another way for corporations to profit on the backs of the middle class. We can’t allow our tax code to move in this direction.