Report: Subsidiaries support 21 million jobs

American subsidiaries of global companies account, directly or indirectly, for roughly one out of eight jobs in the United States, according to a new industry report. 

The Organization for International Investment (OFII) said Thursday that subsidiaries indirectly support some 15.8 million jobs, on top of the 5.3 million they employ. 

Using analysis from PricewaterhouseCoopers, OFII also reported that the operations of subsidiaries and their suppliers make up around 14 percent, or about $2 trillion, of the U.S. gross domestic product. 

But at the same time, OFII officials also say that the U.S. corporate tax code, which Democrats and Republicans alike believe is outdated and in need of an overhaul, is a drag on foreign investment in the United States.

The organization adds that the U.S. share of global investment has dropped in recent years.

“Inbound global investment changes the face of American communities, providing good-paying jobs throughout a local economy,” Nancy McLernon, OFII’s chief executive, said in a statement. “But over the past decade our ability to attract leading global companies has grown sluggish.”

But even though officials from both sides of the aisle have expressed an interest in corporate tax reform, Democrats and Republicans don’t appear close to agreeing on how to do so. 

Efforts to revamp the tax code are also widely expected to spill over into the next Congress. To help boost foreign investment, the Commerce Department also unveiled an initiative called Select USA last year.

The Obama administration released a corporate tax framework in February that would have lowered the top rate from 35 percent to 28 percent while weeding out tax preferences. 

At the same time, President Obama also recently called on Congress to reward companies that bring offshore operations home with tax breaks, and eliminate tax incentives for businesses that move in the other direction.

GOP lawmakers, who are more interested in a 25 percent top corporate rate, responded coolly to the administration framework and also would prefer to overhaul the business and individual tax systems together. 

In its new report, OFII found that the manufacturing sector was the driving force behind subsidiaries’ support of the U.S. economy, accounting for more than 12 million jobs alone. 

OFII’s membership list includes EADS, Nokia, Nissan, Sony, Honda and Anheuser-Busch. 

The report also found that subsidiaries account for one out of five jobs in Delaware, and more than two million jobs in both California and Texas.

---