President Barack Obama reiterated his “jobs will be our number one focus” State of the Union talking point in New Hampshire on Tuesday, but all indications are that he is continuing down the path that led America to less economic freedom – and fewer jobs – in 2009.
Heritage’s Brian Riedl conducted a quick analysis of President Obama’s Fiscal Year 2010 budget and found that the President’s policies would hike taxes by more than $2 trillion over the next decade (counting health care reform and cap-and-trade), raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade, leave permanent deficits that top $1 trillion in as late as 2020, and double the publicly held national debt to over $18 trillion.
Increasing taxes and a growing federal government don’t spell good news for America’s economic freedom or prospects of job growth, but even more trouble abounds. Matthew J. Slaughter, associate dean and professor at the Tuck School of Business at Dartmouth, wrote in Wednesday’s Wall Street Journal that there is even more bad news for U.S.-based multinational firms buried in the President’s budget:
Deep in the president’s budget released Monday-in Table S-8 on page 161-appear a set of proposals headed “Reform U.S. International Tax System.” If these proposals are enacted, U.S.-based multinational firms will face $122.2 billion in tax increases over the next decade.
The fundamental assumption behind these proposals is that U.S. multinationals expand abroad only to “export” jobs out of the country. Thus, taxing their foreign operations more would boost tax revenues here and create desperately needed U.S. jobs.
This is simply wrong. These tax increases would not create American jobs, they would destroy them.
As Slaughter explains, when U.S. multinational firms expand abroad, there is an increase in investment and employment in their related American parent companies, meaning that more jobs are created at home. And he cites U.S. Bureau of Economic Analysis statistics which show that from 1988 through 2007, as “affiliates” overseas increased employment by 5.3 million jobs, U.S. parent companies correspondingly increased employment by 4.3 million jobs.
The 2010 Index of Economic Freedom reveals that the markets suffer, the environment for growth and job creation is threatened and economies are less free when tax burdens go up and Washington undertakes bailouts, massive stimulus spending and other dangerous interventionist decisions. This certainly happened in the United States in 2009. Last year, 3.4 million jobs were lost, with losses occurring in every single month of the year. And with the President pushing for even more taxing, spending and federal government interventionism, America is heading down the path to even less economic freedom and less prosperity. That, of course, means fewer jobs.