ATLANTA — When it comes to taxing profits U.S. corporations earn overseas, Michelle Nunn and David Perdue disagree.
For voters concerned about jobs, the candidates offer a clear choice because of their different approaches to this one tax issue.
Nunn, the Democratic Senate nominee, says profits earned abroad should be taxed and that companies that avoid it are taking advantage of a loophole that needs to be closed.
Perdue, her Republican opponent, believes companies shouldn’t have to face a tax in the first place because no other country taxes overseas profits. He argues that removing the tax would give companies the incentive to use an estimated $2 trillion in ready cash sitting idle in foreign banks to invest in American job creation.
Both campaigns were asked about a statement President Obama made about companies that use tax inversion in which they buy a small, foreign firm and designate it as their “headquarters” to avoid owing income taxes. Obama said the process should be illegal because multinationals are evading a moral obligation.
Republicans have generally noted that companies have a responsibility to shareholders to minimize expenses and are free to use any legal mechanism. Democrats see the tactic as a domestic job killer.
“Throughout this campaign Michelle has called for comprehensive, revenue-neutral tax reform that ends this kind of practice while creating a tax code that is simple, fair, and fuels economic growth,” said Nunn’s spokesman Nathan Click.
Perdue spokesman Derrick Dickey stresses that the companies wouldn’t have a reason to consider inversions if there were no tax.
“The United States has a punitive tax structure, including the highest corporate tax rate in the world, which puts American companies at a tremendous competitive disadvantage,” Dickey said. “David believes in tax reform that would attract profits currently trapped overseas back to America for investment and job creation here at home.”
When both call for tax reform, it means different things.
Nunn also wants to disallow corporate tax deductions for expenses incurred in
closing plants to transfer production to other countries. She is with other Democrats who say those companies would save American jobs if corporations couldn’t use those.
Perdue is focused on rate reductions. He joined conservatives in support of the Fair Tax, a national sales tax to replace income taxes, personal and corporate.
Libertarian nominee Amanda Swafford sees Fair Tax as a salvation.
“The proper response isn’t to ban inversions but to either enact the Fair Tax or move to a territorial system so companies can stay headquartered in America without facing a ridiculous tax surcharge on money made outside our country,” she said.