The 2016 presidential election and accompanying candidate platforms have brought the contentious topic of corporate taxes and offshoring back to the forefront of national attention.
Already some lawmakers are calling for a ban on offshore tax havens for “greedy” corporations. But this would be a mistake. Whether you call it greed or simply the profit motive, companies exist to make money. Costs are minimized, and cutting tax payments is part of the process.
Simply “outlawing” offshoring may do more harm than good.
First, other nations are unlikely to follow suit. Instead U.S. firms become less competitive than their foreign peers which, using tax shelters, increase profit margins and spend more on investments like research and development, capital improvement and market expansion, all of which contribute to long-run economic growth.
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In a globalized world that encourages competition and spurns isolation, American lawmakers should direct attention towards cultivating factors that make the U.S. such an attractive place to conduct businesses in the first place.
Lawmakers should place precedence on measures such as creating a skilled workforce through job-training programs, nurturing innovative ideas through increased research funding, and encouraging investment both at home and abroad through simplified tax codes. Only then will long-term growth be obtained.