Why do companies choose to move jobs overseas? The answer to this question can point the way towards methods to stem the tide. Currently, Americans import 38% more goods and services than they export. In services alone Americans export more than they import, but the imbalance is greater towards importing of goods.

One key factor is the tax code. Every time a company is forced to pay a tax on profits it is unable to invest that money in future growth and development. U.S. companies that produce profits overseas and leave that money overseas can avoid paying tax on that money.

As noted in the Wall Street Journal, the U.S. has the highest corporate tax in the world. Adding in the health care surtax and expiring Bush tax cuts will push to total rate above 40%. Further, the complexity of the code also frustrates companies. All of these factors work together to motivate U.S. companies to move their production and profits overseas and to leave them there.

During the 2008 primary season, then presidential candidate Obama, while still acting as a fiscal moderate, proposed a 1% tax credit to companies that maintain or increase the ratio of employees in the U.S. as compared to other countries. After the election, President Obama abandoned his sham fiscal moderation and sought to increase tax revenue by closing loopholes that allow deferral of taxes produced overseas. Ultimately this idea failed in the face of corporate lobbying. Congressman David Wu is on record as voting in favor of closing the loophole as well.

So, what actions can end the incentive to move American jobs overseas? As a principle, economist Dr. Eric Fruits states “much of the economic evidence indicates that broad-based tax relief is superior to targeted tax relief.” Edward Prescott, who received the Nobel Prize in economics, concludes, “tax revenues should be high enough to generate sufficient revenues, but not so high that they choke off growth and, perversely, decrease tax revenues.”

So, fiscally savvy Americans on both sides of the aisle agree about why U.S. corporations move jobs overseas. Fiscal liberals want to end the practice by closing loopholes and increasing taxes while fiscal conservatives want to lower corporate taxes altogether. The evidence shows that the second solution is the more effective in creating conditions for corporate and job growth. So, we should set aside party politics and do that which will help our country.

As a final note, this isn’t about enriching corporations by making them pay less tax. Rather, this is strictly about giving companies good reasons to create and retain good jobs within the United States as a direct solution to our current problems. And this is one solution that hasn’t been mentioned as part of the current administration’s jobs summit.

If you don’t like the current leadership, next year you have a chance to replace many of the people that vote on the bills that are ultimately signed by the President. Congressman David Wu has demonstrated his support for the policies of the administration, including a desire to increase corporate taxes. It’s time to replace David Wu and I’m running to bring solutions that serve the interests of working Americans.

Thank you very much for your support.

Sincerely,

Doug Keller