Obama, Romney both right (sort of) in debate clash on outsourcing
WASHINGTON -- There’s a tax break for U.S. companies that move jobs overseas, President Obama said in Wednesday’s presidential debate.
No, there isn’t, said his Republican challenger Mitt Romney.
It turns out they’re both right -- sort of.
Here’s the exchange that probably left many viewers scratching their heads.
“Right now you can actually take a deduction for moving a plant overseas. I think most Americans would say that doesn’t make sense,” Obama said.
It didn’t make sense to Romney, who responded, “You said you get a deduction for getting a plant overseas. Look, I’ve been in business for 25 years. I have no idea what you’re talking about. I maybe need to get a new accountant.”
Romney insisted, “The idea that you get a break for shipping jobs overseas is simply not the case.”
But the way each candidate phrased their assertion makes them both correct.
“Under present law, there are no specific tax credits or disallowances of deductions solely for locating jobs in the United States or overseas,” the congressional Joint Committee on Taxation wrote in June to lawmakers sponsoring the proposed Bring Jobs Home Act.
The legislation, which failed to overcome a Republican filibuster in the Senate a month later, was designed to stop outsourcing and encourage American companies to move jobs back to the U.S.
So Romney was technically right in implying there is no special break.
But Obama didn’t say it was a special break. He simply said companies could take a deduction if they moved jobs overseas. And on that point, he is right.
The Joint Committee on Taxation noted in that same letter that “deductions are generally allowed for all ordinary and necessary expenses paid or incurred by the taxpayer ... in carrying on any trade or business, which includes the relocation of business units.”
The deduction applies whether the company is “moving down the street or moving to Asia,” said Steve Semerdjian, a partner at the Loeb & Loeb law firm who specializes in outsourcing.
“They are both techincally correct,” he said. “There is no specific break for moving offshore, but you get the benefit of a deduction as any company would if they moved down the street.”
The issue actually involves a relatively small amount of money.
Prohibiting the deductibility of expenses for overseas moves would save $168 million from 2012-2022, according to the Joint Committee on Taxation’s costs estimates for the Bring Jobs Home Act. That means the tax break only funnels about $15 million a year to U.S. companies.
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