Tags: Barack Obama | MidPoint | Peter Morici | Barack Obama | seniors | taxes | companies

Peter Morici: Obama's Foreign Profit Tax Plan Hurts Seniors

By    |   Thursday, 05 February 2015 08:08 PM

A one-time tax on U.S. firms' foreign profits to pay for roads and bridges back home is "great political theater" for President Barack Obama — who floated the idea — but "terrible economics" that will drive good companies overseas and hit American retirees in the wallet, says economist Peter Morici.

Morici ridiculed the overseas tax penalty lurking in Obama's proposed 2016 budget, telling "MidPoint" host Ed Berliner on Newsmax TV Thursday that the U.S. already taxes foreign business earnings, whereas many countries do not, and that's on top of what U.S. firms pay in taxes to their host nations.

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"Not even the French, who the president so wants to emulate, tax the overseas earnings of, say, Peugeot," said Morici, a syndicated columnist and University of Maryland business professor.

Conversely, a company such as General Electric pays French taxes on earnings from its operations in France, and U.S. taxes on those foreign earnings that the company does not keep abroad.

And now the president wants an additional one-time levy of 14 percent on "all of the past earnings that are parked overseas," said Morici, to help replenish the Highway Trust Fund and fund repairs of decaying bridges and rail lines.

"That's absurd," said Morici. "Basically, what he's saying to General Electric is, 'Find yourself a French buyer and move out. Paris is more hospitable than Connecticut.'"

The proposal has already drawn fire from Republicans, business groups, and conservative low-tax advocates.

Obama "seems to think that European statism somehow will make America a prosperous workers' paradise," said Morici. "But let's look at that paradise: It's got 12 percent unemployment in Europe in general; it's got countries like Greece falling off the cliff.

"If we had that kind of democracy here, Mississippi would have 25 percent unemployment," he said.

A new tax regime for overseas company profits would also put a dent in many seniors' income, said Morici.

"More and more Americans rely on stock investments and dividends from firms like Procter & Gamble and so forth to fund their retirement because company pensions are gone," said Morici. "This [tax proposal] is going to drive down dividends and stock values.

"Just like the quantitative easing — of printing money, all the rest, in Washington — it's coming down very heavily on the elderly," he said.

Morici guessed that Obama has made a political calculation that seniors won't make a fuss.

"So you can kick hell out of them and it's not going to impact how Democrats do at the polls," he said. " He's probably right. But it's very cynical, very selfish and it's very cruel."

Morici also discussed the chief of Gallup polling firm calling the 5.6 percent U.S. unemployment rate a "big lie."

Well, the unemployment numbers are all wrong, but it isn't like someone is cooking the numbers," said Morici.

"Back in the day, when only 5 percent of adult males didn't work, focusing on that headline number made sense," he said. "But if the same percentage of Americans were working today as when Obama took office, the unemployment rate would be almost 10 percent — about where he started out.

"He's made no real progress, other than encouraging young people to take out loans, to stay in school and live off that, and essentially giving out food stamps and Medicaid to middle-aged folks," said Morici.

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A one-time tax on U.S. firms' foreign profits to pay for roads and bridges back home is "great political theater" for President Barack Obama but terrible economics that will drive good companies overseas, says economist Peter Morici.
Peter Morici, Barack Obama, seniors, taxes, companies
Thursday, 05 February 2015 08:08 PM
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