In the wake of Jeffrey Immelt’s ascent to the chairmanship of President Obama’s jobs council, some commentators have questioned whether the leader of General Electric, a company that has sharply reduced its United States payrolls over the years, is the best person to be orchestrating a jobs revival.
Among executives of multinational companies, Mr. Immelt is hardly alone in having presided over a major reduction in domestic jobs amid a major increase in foreign jobs. Witness the following chart, which shows changes in domestic and foreign employment at American multinational companies from 1998 through 2008 (that is, the decade leading up to the financial crisis):
Martin SullivanThe chart is taken from testimony by Martin Sullivan, an economist and contributing editor with Tax Analysts, in a discussion of how international tax rules favor foreign, rather than domestic, job creation, especially by United States multinationals.
As a result of these distorting effects of the current tax code, the leaders of a number of multinationals — General Electric included — have been calling for a tax holiday, under which companies could repatriate cash to the United States under a temporarily lower tax rate of about 5 percent, instead of the full 35 percent corporate tax rate. The companies have argued for this tax holiday, as well as other changes to the corporate tax system, as potential ways to encourage more firms to hire American workers.
As the leader of America’s biggest multinational company, Mr. Immelt is expected to continue pushing for this particular policy in his new role as President Obama’s new jobs czar. He was chosen, after all, in order to bring the perspective of the business community to the table during discussions of how to get businesses hiring again.
Unfortunately, though, the evidence on the effectiveness of another similar “tax holiday” is mixed at best. Which is one reason to be concerned about whether Mr. Immelt’s advice on how to stimulate job creation may be somewhat complicated by his role with General Electric.
As Mr. Sullivan of Tax Analysts writes:
Citizens have a right to be concerned the president’s new adviser will give priority to promoting the competitiveness of U.S. multinationals rather than the competitiveness of the overall U.S. economy. And why shouldn’t he? He has a fiduciary responsibility to his shareholders to do exactly that.
E-mail This Print Share Close Linkedin Digg Facebook Mixx My Space new_york_times:http://economix.blogs.nytimes.com/2011/01/27/is-a-multinational-c-e-o-the-best-jobs-czar/ Permalink employment, General Electric, Jeffrey Immelt, multinationals, Outsourcing Related Posts From Economix Jeffrey Immelt 101Borderless Economy, Jobless Prosperity Obama and Business May Get On Well, but When Will That Produce Jobs?Wage Growth, or Lack ThereofBig-Business Deadbeats Previous Post Obama and Business May Get On Well, but When Will That Produce Jobs? Next Post Winners and Losers Under the U.S. Corporate Tax Code NYTD.CRNR.userContent.getUserContent(25,'default'); Search This Blog Search Previous Post Obama and Business May Get On Well, but When Will That Produce Jobs? Next Post Winners and Losers Under the U.S. Corporate Tax Code Follow This Blog Twitter RSS Featured Economix Posts Is a Multinational C.E.O. the Best Jobs Czar? //
Multinationals have a bad record of job growth in the United States. Given his company’s views on corporate tax policy and job creation, what will Jeffrey Immelt of General Electric bring to the table?
Obama and Business May Get On Well, but When Will That Produce Jobs? //
It would be nice if President Obama’s courting of big business led to job creation, but there’s not yet any sign that it will, an economist writes.
Q.&A. on the State of the Union and the Economy //
Answers to readers’ questions about the State of the Union message, the Republican response and the economic outlook.
In the wake of Jeffrey Immelt’s ascent to the chairmanship of President Obama’s jobs council, some commentators have questioned whether the leader of General Electric, a company that has sharply reduced its United States payrolls over the years, is the best person to be orchestrating a jobs revival.
Among executives of multinational companies, Mr. Immelt is hardly alone in having presided over a major reduction in domestic jobs amid a major increase in foreign jobs. Witness the following chart, which shows changes in domestic and foreign employment at American multinational companies from 1998 through 2008 (that is, the decade leading up to the financial crisis):
The chart is taken from testimony by Martin Sullivan, an economist and contributing editor with Tax Analysts, in a discussion of how international tax rules favor foreign, rather than domestic, job creation, especially by United States multinationals.
As a result of these distorting effects of the current tax code, the leaders of a number of multinationals — General Electric included — have been calling for a tax holiday, under which companies could repatriate cash to the United States under a temporarily lower tax rate of about 5 percent, instead of the full 35 percent corporate tax rate. The companies have argued for this tax holiday, as well as other changes to the corporate tax system, as potential ways to encourage more firms to hire American workers.
As the leader of America’s biggest multinational company, Mr. Immelt is expected to continue pushing for this particular policy in his new role as President Obama’s new jobs czar. He was chosen, after all, in order to bring the perspective of the business community to the table during discussions of how to get businesses hiring again.
Unfortunately, though, the evidence on the effectiveness of another similar “tax holiday” is mixed at best. Which is one reason to be concerned about whether Mr. Immelt’s advice on how to stimulate job creation may be somewhat complicated by his role with General Electric.
As Mr. Sullivan of Tax Analysts writes:
Citizens have a right to be concerned the president’s new adviser will give priority to promoting the competitiveness of U.S. multinationals rather than the competitiveness of the overall U.S. economy. And why shouldn’t he? He has a fiduciary responsibility to his shareholders to do exactly that.
Multinationals have a bad record of job growth in the United States. Given his company’s views on corporate tax policy and job creation, what will Jeffrey Immelt of General Electric bring to the table?
It would be nice if President Obama’s courting of big business led to job creation, but there’s not yet any sign that it will, an economist writes.
Answers to readers’ questions about the State of the Union message, the Republican response and the economic outlook.
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Catherine Rampell is the economics editor at nytimes.com.
David Leonhardt writes the Economic Scene column, which appears in The Times on Wednesdays.
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Sewell Chan writes about economic issues from Washington D.C.
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Multimedia Breaking Down the BailoutAn accounting of the government’s rescue package.
How the Government Dealt With Past RecessionsThree economists explain what worked and what didn't.
Geography of a RecessionA map of unemployment rates across the United States, now through January.
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Blogroll Blogroll Barking Up the Wrong Tree Brad DeLong Cafe Hayek Calculated Risk Capital Gains and Games Dani Rodrik's Weblog DataPoints: The Dismal Scientist Blog Econbrowser EconLog Economist's View Greg Mankiw Marginal Revolution Nouriel Roubini's Global EconoMonitor Nudge Raghu Rajan Robert Reich Tax.com TaxProf TaxVox The Baseline Scenario The Becker-Posner Blog The Big Picture Will Wilkinson: The Fly Bottle Blogs From Newspapers and Magazines Andrew Sullivan Ezra Klein Felix Salmon Floyd Norris Freakonomics Free exchange (The Economist) James Surowiecki Megan McArdle Money-Supply (Financial Times) Paul Krugman Real Time Economics (WSJ) Wolf Forum (Financial Times) Economic Resources Employment Statistics GeoFRED: Geographic Federal Reserve Data Historical Data on Job Growth and Wages Historical Unemployment Data Inflation Calculator Interactive Housing Calculator International G.D.P. Rankings Latest Job Market Data Local Gas Prices Statistics on Income, Poverty and Health Insurance Coverage in the U.S. U.S. G.D.P. Statistics Tag List DAILY ECONOMIST 546 TAXES 270 UNEMPLOYMENT 266 HEALTH CARE 223 EMPLOYMENT 139 EDWARD L. GLAESER 128 UWE E. REINHARDT 127 HOUSING 126 STIMULUS 125 HEALTH INSURANCE 115 CASEY B. MULLIGAN 113 JOBS 107 JOBS REPORT 107 SIMON JOHNSON 104 WOMEN IN THE WORKFORCE 99 NANCY FOLBRE 95 CHINA 94 RECESSION 88 BUDGET DEFICIT 86 U.S. HEALTH CARE COSTS 85 FEDERAL RESERVE 82 EDUCATION 81 FINANCIAL CRISIS 74 GREAT RECESSION 70 HIGHER EDUCATION 69 BAILOUT 67 BANKS 67 INTERNATIONAL ECONOMICS 66 MAP 66 GROSS DOMESTIC PRODUCT 63 Archive Select Month January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Back to Top © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Corrections RSS First Look Help Contact Us Work for Us Advertise Site Map function apture_onload() { apture.addCallback(apture.WINDOW_OPEN, function() { dcsMultiTrack('DCS.dcssip','www.nytimes.com','DCS.dcsuri','/blogs/Apture.html','WT.ti','Apture','WT.z_dcsm','1'); }); } if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-67"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');Apture allows readers to dig deeper into a subject without ever leaving the blog post. When you click on any link marked by the icons , , or , you will be able to view video, reference materials, images and other related media. Please e-mail your feedback and thoughts on this feature to apture@nyt.com.
An accounting of the government’s rescue package.
Three economists explain what worked and what didn't.
A map of unemployment rates across the United States, now through January.
Faces, numbers and stories from behind the downturn.
A series about the surge in consumer debt and the lenders who made it possible.
A series exploring the origins of the financial crisis, from Washington to Wall Street.
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