I was greeted this morning by one of the most welcome stories I’ve read in some time. US President Barack Obama has signaled his intent to close some infamous gaps in our byzantine tax code. Specifically, loopholes that allow US corporate entities as well as individuals to evade their fair share of taxes.
In my opinion this is a good move for the US in general, as one goal is to remove incentives for US-based companies to create jobs overseas rather than onshore. I’m not against multinationals per se, but on the other hand the extreme loss of our manufacturing base has troubled me for some time.
I suspect some of this tax evasion nonsense was at least partially responsible for my job loss in 2002. The company for which I worked at the time was sending not just manufacturing jobs but research and development work to other countries, and executives also engineered an ill-fated attempt to reincorporate in an offshore tax haven (the move was scuttled after severe stockholder and government backlash).
As the US has turned over from net-producer to net-consumer nation, our financial foothold has become shakier. I’m no economics expert (and suspect that neither are half of those claiming to be) but I don’t see how a net-consumer nation can long sustain itself. The act of creation underpins a solid trading position. Persisting as a debtor nation is fraught with risk and leads to an inevitable decline.
People I knew scoffed in the late 1990s when I claimed a mostly service-based economy was untenable here in the US. After two significant economic resets, I’m wondering if they’ve been converted into believers yet.
It’s certainly true that in a global market a nation with lower standards of living and little concern for the well-being of its citizenry can always undercut the manufacturing base of countries like the United States. But there are always needs that come with important but often downplayed qualifiers such as time, quality and local investment. Somehow we crossed the rubicon of international trade and allowed imports to overtake exports. Here’s hoping that Obama’s loophole closure survives the lobbyists and helps this nation regain its footing.