It’s hard to pinpoint just how many jobs our tax code ships overseas. But in an article published by Tax Analysts, Martin Sullivan found that U.S.-based multinational companies are creating about one new job overseas for every one they slash here. The issue isn’t just jobs, though. Every dollar of taxes that these companies avoid shifts the burden further onto working folks. With loopholes like this, is it any wonder that the share of overall taxes paid by corporations is less than half what it was when Eisenhower was president? And this at a time when CEOs get rich while the wages of average workers stagnate and everyone gets socked with higher health care and energy costs.

So when you think about it, the really loony part is that American workers are in effect subsidizing-through taxes-their own job losses. What’s more maddening is that this isn’t a secret. It blows up in the news every couple of years during election season, with politicians vowing to close this loophole in an instant. But once the votes are cast, the talk in Washington dies down.

When it comes to overseas earnings, Congress needs to step in and make companies pony up. It could change the law to tax overseas earnings at the same rate as domestic income. That would mean all-out war with powerful lobbyists, who also happen to donate generously to both parties. (Translation: It’s not very likely.) Another idea is to lower tax rates across the board for all corporations, making America more competitive abroad and rewarding companies investing here at home-while letting the government reap gains from less tax avoidance. That’s not protectionism or big government. It’s just applying the law with common sense and fairness.

Defenders of the current situation say that changing the foreign-income law could stunt the economy and drive businesses to relocate more, if not all, of their operations to other countries. But not many American CEOs want to leave their home country altogether-they would rather avoid the unpredictable social and legal factors in foreign countries. Plus, they like living here in the United States. Another claim is that when American companies do well overseas, their profits help them flourish back home, too, creating more jobs everywhere. If people really believe that, then why not just be open about it and create tax credits for investment overseas?

Let’s be realistic: Changing the tax code can’t stop jobs from going overseas. Profit-minded companies will always seek out places where labor is cheaper, almost regardless of the tax consequences. The huge money a CEO can save by relocating a call center from Indiana to India will often outweigh any other factor. But even though we can’t do anything about wages abroad, we can stop Washington from rewarding companies for investing overseas-at the expense of American workers.

Do More

1. Write your legislators to ask what they are doing about this issue. Go to www.house.gov and www.senate.gov to send them an e-mail.
2. Contact tax-law leaders in the House (senior Ways and Means Committee members are Charles Rangel and Jim McCrery) and Senate (senior Finance Committee members are Max Baucus and Charles Grassley). Go to www.congress.org to send a message.
3. Learn more by visiting the Center on Budget and Policy Priorities (www.cbpp.org) and Citizens for Tax Justice (www.ctj.org).