January 25, 2012 7:55AM # Fact Checking the SOTU: Corporate Taxes By [Chris Edwards](https://www.cato.org/people/chris-edwards) --- SHARE Let’s do some fact checking on President Obama’s corporate tax comments in last night’s [State of the Union](http://www.cbsnews.com/8301-503544_162-57365343-503544/obamas-state-of-the-union-address-full-text/). **Claim: “Right now, companies get tax breaks for moving jobs and profits overseas.”** False: There are no such breaks. Instead, we punish U.S. and foreign businesses for investing and creating jobs here. **Claim: “If you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it.”** False: There is no such tax deduction. **Claim: “No American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas.”** False: America is not a prison camp. Besides, imposing a 40-percent tax rate on corporations that invest here is not a “fair share.” **Claim: “From now on, every multinational company should have to pay a basic minimum tax.”** False: [We’ve already got](http://www.law.upenn.edu/fac/mknoll/camt.pdf) a corporate “alternative minimum tax,” and it’s an idiotic waste of accounting resources that ought to be repealed. **Claim: “It is time to stop rewarding businesses that ship jobs overseas.”** False: We penalize them for locating jobs here. Besides, the overseas operations of U.S. companies generally complement domestic jobs by boosting U.S. exports. **Claim: “Companies that choose to stay in America get hit with one of the highest tax rates in the world.”** True: Our rate is 40 percent, which compares to the [global average rate of just 23 percent](http://www.kpmg.com/global/en/issuesandinsights/articlespublications/pages/corporate-indirect-tax-rate-survey-2011.aspx). See the chart below, which is based on [KPMG data](http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/corporate-and-indirect-tax-rate-survey-2011.pdf). ![Media Name: 201201_blog_edwards251.jpg](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/201201_blog_edwards251.jpg?itok=IgGNRgIA) **Claim: “If you’re an American manufacturer, you should get a bigger tax cut. If you’re a high-tech manufacturer, we should double the tax deduction you get for making your products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.”** False: It’s a horrible idea to create special breaks for certain types of government-favored businesses. It would simply encourage the exact type of tax game-playing and lobbying that the president decries. What’s a “high-tech” manufacturer? What’s an “American” manufacturer? What’s a “manufacturer”? How “hard hit” do towns need to be? Upshot: From the president’s one “true” comment we can derive the simple and logical solution to our corporate tax problem. We should stop “hitting” companies with a 40-percent sledgehammer, and cut our corporate statutory rate to boost investment and reduce corporate tax avoidance. Note to self: Mail copies of *[Global Tax Revolution](http://www.amazon.com/Global-Tax-Revolution-Competition-Battle/dp/1933995181)* to WH speechwriters. ##### Related Tags [General](https://www.cato.org/general), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).