Among the bewildering array of legislation in Washington, D.C., is a proposal that would impair U.S. employers’ ability to sell goods and services abroad.
This fundamental change to the U.S. international tax system would deny tax deductions for employing Amer-icans who support international operations and put U.S. companies and workers at a disadvantage.
Unlike most other countries, the United States taxes the foreign earnings of worldwide American companies, not just their U.S. earnings. To level the playing field and keep American companies competitive in international markets, a series of complex tax rules prevents double taxation and allows American companies to compete on equal footing with their foreign competitors. These provisions are now under assault.
Under the guise of “closing tax loopholes,” Congress is now eyeing tens of billions of dollars in new taxes – even though these “loopholes” are legitimate deductions and allow companies like mine to employ at home to compete abroad.
In this Washington, the state with a favorable balance of international trade, and the highest percentage of employment at stake with American companies selling goods and services internationally, we have the most to lose from this ill-conceived proposal.
Most of our congressional representatives seem to share this view. For example, in a recent letter to House Speaker Nancy Pelosi, Congressmen Adam Smith, Rick Larsen, Jay Inslee and Brian Baird, members of the New Democratic Coalition, all urged consideration of international tax policy in the context of the development of a comprehensive tax reform proposal designed to promote global competitiveness of U.S. companies.
They noted that changes in tax policy should not have the unintended consequence of stifling economic growth and shifting employment elsewhere.
All of us working in this Washington should concur. In spite of challenges in the current tax law, the company I work for is American-owned and has been competing internationally over the last 15 years. Our international operations were originally the result of an initiative to find more jobs for our employees by investing and providing services in foreign ports.
Now that we are an established international port operator, replacing American employees and vendors with foreign-sourced ones – which would be deductible under this proposal – are not steps we want to take. SSA Marine is the only American-owned and American-based international port operator.
Today about 2 percent of our American employees serve as expatriates living overseas, and many more travel to these operations as part of their daily jobs. We estimate that more than 30 percent of our managerial, administrative and other staff here in the Pacific Northwest work in support our international activities.
These are jobs for Americans working in the U.S. that exist “onshore” simply because an American company was able to invest and provide services in foreign, privately operated ports.
What we do in port operations overseas could also be done by any number of our competitors, all of which are based, in Europe, Asia and the Middle East. Of course, we also compete here with these foreign companies, which make up a majority of private port operators even in the U.S.
My employer is just one example of how the U.S. exports many services that do not show up in trade figures. The U.S. remains by far the largest global exporter when goods and services are considered. Both world trade and the continued global competitiveness of American companies in services are vital to our employment base and economic recovery. If multinational American companies have to pay higher taxes than foreign conglomerates, they will becomes less competitive – which hurts the American economy and our workers.
To keep good jobs and decent wages here in America, we must ensure that the U.S. tax code keeps worldwide American companies competitive both at home and abroad. If your job depends directly or indirectly on international trade or companies that sell goods and services abroad, then consider letting your elected representatives know your concern.
Jon Hemingway is CEO of Carrix Inc., the only American-owned major international port operator. Carrix is headquartered in Seattle and is the parent company of SSA Marine, Tideworks Technology and Rail Management Services.
