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You've already heard, and will keep hearing incessantly as the presidential campaign heats up, the argument that U.S. multinational corporations are at a competitive disadvantage because of our high corporate tax rate.

The latest takedown of that argument – and the argument that we should adopt a "territorial" tax system that would allow corporations to shield more of their profits from U.S. taxes – comes from 24 prominent economists whose letter to Congress was published this week in Tax Notes.

The list of signers includes Emmanuel Saez of the University of California at Berkeley and his university colleague Robert B. Reich; Edward D. Kleinbard, University of Southern California professor and former congressional Joint Committee on Taxation chief of staff; Lawrence Mishel at the Economic Policy Institute, and Martin Lobel, chairman of Tax Analysts.

Their letter first argues that "there is no factual basis for the assertion that U.S. multinationals cannot compete globally because of the U.S. tax system." The numbers show that U.S. corporations right now are doing very well, thank you: Corporate profits in just the second quarter of 2015 were $1.8 trillion, almost 10 percent of the nation's gross domestic product. The taxes paid on those profits as a percentage of GDP, meanwhile, are near an all-time low: 1.9 percent.

In the early 1950s, corporations paid nearly one-third of the taxes that went into the U.S. treasury, with workers paying the rest. Now corporations pay less than 11 percent of the tax load, and working people pay 89 percent.

While conservatives (and many self-styled moderates) complain that the top corporate tax rate of 35 percent is too high, they neglect to mention that multinationals typically pay far less than 35 percent – in fact, some multinationals pay nothing or close to nothing. "In sum, U.S. multinationals are unquestionably the world’s leaders in global tax-avoidance strategies, relying on profit shifting to foreign tax havens and other tax-avoidance strategies," the economists' letter says. The real problem is that, as the letter goes on to say, "[t]his gives them a big advantage over domestic U.S. firms, many of which pay close to the statutory rate, and it encourages the export of jobs and shifting of profits."

There is a big push, particularly among Republican congressional leaders and presidential candidates, to move the U.S. toward a "territorial" tax system, in which corporations are taxed only on the income generated in the country, not on the income earned elsewhere in the world. This sounds intuitive, but here's the rub: First, U.S. corporations already get to deduct the taxes they pay to other countries on their overseas operations, so they are not "double-taxed." But, more significantly, U.S. corporations get to defer taxes on profits that are kept overseas until those profits are "brought home" for reinvestment or other purposes. That deferral option is what is driving the $2.1 trillion stash of cash corporations are hoarding overseas.

President Obama and several members of Congress have proposed "deemed repatriation" schemes in which corporations would be allowed to pay an exceptionally low tax on those profits. That is usually coupled with a deeply discounted rate on future profits held overseas and an overall lower corporate tax rate on domestic profits. The carrot that has been dangled is that the revenue from deemed repatriation would be used to help pay for a highway and mass transit spending plan that is currently languishing in Congress.

The economists respond that "a territorial tax system would only increase incentives for companies to shift profits offshore and exacerbate the use of tax-avoidance strategies, thereby increasing their competitive advantage over domestic companies that create jobs and profits in America. This is because, once designated as foreign earnings, that income would never be taxed, even upon repatriation to the U.S. parent."

The economists recommend that the U.S. maintain its current worldwide taxation framework and take leadership in development global anti-tax avoidance rules. "The G-20 and OECD countries, many with territorial tax systems, have recognized that all nations lose when multinational companies succeed in sheltering income from taxation in any country – income that is effectively ‘stateless,’" the economists write.

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