October 10th, 2008
06:50 PM ET
6 years ago

Fact Check: Does McCain want tax breaks for companies that send jobs overseas?

Is McCain really in favor of tax breaks for outsourcing companies?
Is McCain really in favor of tax breaks for outsourcing companies?

The Statement

At a campaign event Thursday, October 9, in Cincinnati, Ohio, Democratic presidential nominee Barack Obama repeated a long-time charge: "John McCain says he wants to keep giving tax breaks to companies that ship jobs overseas."

Get the facts!

The Facts

All U.S. corporations are required to pay a 35 percent tax on income, including that earned outside the United States, but numerous loopholes complicate corporate tax laws. U.S. companies are allowed to defer paying taxes on income as long as that money is being used by the company overseas and remains "unrepatriated income." Tax experts say that can amount to a lengthy or even indefinite deferral, as long as the corporation continues its overseas operations. Deferring tax payment on income earned with non-U.S. operations does offer an incentive for U.S. companies to do business abroad.

The Obama campaign cites as the basis for its claim three Senate votes by Republican nominee Sen. John McCain going back to 1995, with the most recent one being in 2005, against repealing tax subsidies or tax deferrals for U.S. companies with overseas operations.

The Obama campaign also says McCain's economic proposals don't include proposals for changes to current law that allow U.S. companies to defer paying taxes on off-shore income.

The McCain campaign says that McCain has not made statements advocating tax breaks for overseas companies, and the campaign points to McCain's proposed reduction in the tax rate for all U.S. corporations from 35 percent to 25 percent as an incentive that would encourage multinational companies to invest more in U.S. operations and jobs. A CNN search of McCain campaign statements also found nothing advocating tax breaks for corporations operating overseas.

CNN asked a McCain campaign spokesman to explain McCain's position on tax deferred corporate income. The spokesman said the issue was being researched, but by deadline on Friday, October 10, there was no response. The campaign did supply CNN with material arguing that the loss of U.S. jobs to overseas operations cannot be linked directly to the tax rules for U.S. companies operating abroad.

Robertson Williams, principal research associate for the Washington, D.C.-based non-partisan Tax Policy Center, said the issue of taxes and domestic companies moving operations and jobs overseas is complex.

"There is the real movement of production units - you close a factory in North Carolina and start producing textiles in China with Chinese workers, and the people in North Carolina lose their jobs. Then there is the strictly financial one - a company moves its headquarters to the Cayman Islands but leaves its jobs here. Either way, there are tax implications for any company (with operations abroad) but they're not necessarily related to sending jobs overseas," Williams said.

"The point is that McCain has not come out in favor of cracking down on companies doing business overseas," Williams said. "It's one of those amorphous things - if you don't favor undoing something, does that mean you're in favor of doing it?"

The Verdict

Misleading. While McCain is on record voting as recently as three years ago
against eliminating or changing tax deferrals for U.S. companies with overseas

operations, he has not said he "wants to keep giving tax breaks" to companies
sending jobs overseas, as Obama stated. Obama's statement also oversimplifies
the complexities of taxes for U.S. companies operating abroad, and U.S. jobs
moving overseas.


Filed under: Candidate Barack Obama • Fact Check • John McCain
soundoff (58 Responses)
  1. MICHAEL WERNER

    I AM CONCERN WITH PRESIDENTIAL NOMINEE JOHN MCCAIN'S CHANGE TO HIS WEB SITE. HE ORIGINALLY SAID THE BAIL OUT OF HOME OWNERS SHOULD BE BASED ON CURRENT ESTIMATES OF SAID PROPERTY.

    HIS WEB SITE NOW SAYS THESE BAD MORTGAGES SHOULD BE BAILED OUT BASED ON AMOUNT OF LOAN AT THE TIME LOAN WAS AUTHORIZED WHICH IS A LOT HIGHER APPRAISAL VALUE THEN PRESENT APPRAISAL VALUE IS TODAY.

    THIS CHANGE WOULD MEAN THAT AMERICAN TAX PAYERS WOULD BE BUYING PROPERTIES ABOVE THEIR CURRENT APPRAISAL VALUE, AND OUR U.S. CITIZENS WOULD BE ON THE HOOK FOR THESE HIGHER COST. THIS MEANS THE TAXPAYERS WOULD BE PAYING FOR LOSSES OF THESE PROPERTIES IN DEFAULT BASED ON OLDER HIGHER APPRAISALS WHICH IS NOT FAIR TO AMERICAS.

    IF WE CAN BUY DEFAULTED PROPERTIES AT THEIR CURRENT ESTIMATES, WE THEN MAYBE ABLE TO ACTUALLY MAKE A PROFIT ON THESE HOMES AS PRICES GO BACK UP WHICH MAY BE YEARS, BUT ITS BETTER THEN BEING DEEPER IN DEBT FROM THE DAY PROPERTIES WERE PURCHASE. NO HOME BUYER WOULD WANT TO PAY FOR A HOME AT OLDER HIGHER PRICES, SO WHY WOULD THE U.S. GOVERNMENT NOT BE ALLOWED THE SAME SENSIBLE PURCHASES.

    MCCAIN CAMPAIGN MANAGER WAS BEING PAID BY FANNIE AND FREDDIE UP TO A MONTH AGO!

    October 10, 2008 09:42 pm at 9:42 pm |
  2. Terri

    McCain didn't expect to be facing a qualified, well educated black man for the highest position in the land. So now he has to try low down tactics to discredit Obama. I use to think he was an honorable man in a dishonest party, but now I know he is and what's really sad is he doesn't see himself drowning in a pool of desparation. Sarah Palin is an ignorant, uneducated, bullying woman, who acts like trailer park trash that's waiting to be taken out. Just give her a Bud Light and a rifle and she'll be fine. ERACISM

    October 10, 2008 09:43 pm at 9:43 pm |
  3. jm from sc

    The best way to figure out what a person will vote in the future is look at the past. If he voted against eliminating the tax cuts three years ago, he will continue to support that position in the future. McCain will say, do or allow just about anything to get elected.

    October 10, 2008 09:43 pm at 9:43 pm |
  4. Hal, Redondo Beach, CA

    Well who can tell where McCain stands on any issue??

    He wants to nationalize mortgages, which is PURE socialism and then he wants to regulate and deregulate.

    He hates war but he loves to joke about it and thinks we need to have more of 'em.

    He thinks getting Al Queda in Afgahnistan is not important to the war on terror the next day it's central.

    He doesn't understand the economy then he's an expert.

    He says he wants a clean campaign then he starts the biggest sleazeball campaign.

    October 10, 2008 09:49 pm at 9:49 pm |
  5. evans

    California Gold, I would suggest you remove the koolaid from your ears and might be able to hear

    October 10, 2008 09:50 pm at 9:50 pm |
  6. Bill

    Simple explanantions by simple minds; no wonder this comes from Obama commercials sponsored by CNN

    October 10, 2008 09:51 pm at 9:51 pm |
  7. LJinLACA

    There can be no economic recovery without American jobs and growth in the tax revenue.
    We couldn't afford this trend when it started and surely everyone knows at this point it cannot continue.
    Obama gets it, Biden gets it, and hopefully the voting majority puts it to bed.

    October 10, 2008 09:54 pm at 9:54 pm |
  8. James

    Mccains Ideas on the economy seem to be whats good for corporate america is good for all of america.

    While this would seem like a good idea. Like business receiving tax breaks so they have more money to give to their employees. It does not work in practice. While some small business might be able to give that long needed raise most jobs in america would see no difference and the blue collar workers will just get screwed.

    What I would like to see is a raise of the minumum wage coupled with tax breaks to companies this ensures that your joe six pack worker gets the benifits of tax breaks to a company.

    also if it were raised from say 6 to 11 dollars an hour competive jobs that require special training would also be forced to increase pay as well but since everyone is receiving tax breaks it would be possible.

    This would be a transference of wealth to the people in a way that benifits everyone but government.

    October 10, 2008 09:54 pm at 9:54 pm |
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