Obama's Comments on Corporate Tax Reform at Odds With Tech Industry

President Barack Obama's efforts to differentiate himself from GOP challenger Mitt Romney on corporate tax reform are unlikely to sit well with the tech industry. Although both agree on the need to cut the corporate tax rate, President Obama has criticized Romney for also favoring the implementation of a territorial tax system, which calls for taxing only those earnings that occur inside the United States.

Under the current U.S. tax system, corporations are taxed for what they earn domestically and abroad unless they reinvest those revenues overseas. Many tech groups have joined with other business interests in pushing for a territorial tax system along with a reduction in corporate tax rates. They argue that allowing companies to bring back earnings that have been parked offshore to avoid what they describe as "double taxation" will allow them to create jobs in the United States. They say it would make the United States more competitive against many other countries that have adopted a territorial tax system. They also note that Obama's assertion that such a system would lead to the creation of 800,000 jobs abroad is based on a flawed study that did not measure the impact of tax reform on U.S. job creation.