By Jay Heflin - 08/10/10 06:43 PM EDT
"Democrats suggest the state and local government bailout bill to be considered in the House on Aug. 10 will temporarily 'save' certain government jobs," a release from Camp's office states. "But what they won't tell you is that the $9.6 billion in permanent tax hikes they would impose to 'pay for' that extension of stimulus would destroy over 141,000 private-sector jobs."
The offset mentioned in the release is the restricted use of foreign tax credits by U.S. multinational companies.
The release states that the job-loss figure stems from using an economic model developed by Dr. Christina Romer, the chairwoman of President Obama's Council of Economic Advisers.
The paper that contains the model states: "In short, tax increases appear to have a very large, sustained and highly significant negative impact on output. ... [The] more intuitive way to express this result is that tax cuts have very large and persistent positive output effects."
House Ways and Means Committee Chairman Sandy Levin (D-Mich.) says the impetus for restricting the use of foreign tax credits is to keep companies from abusing the measures.
The original intent of these credits was to ensure that U.S. multinational companies did not suffer double taxation. But Levin said these tax breaks have been abused by companies that use them to offset unrelated foreign income to avoid paying U.S. taxes.
Restricting foreign tax credits was recently included in legislation aimed at bolstering the manufacturing sector.
At that time, the National Association of Manufacturers (NAM) came out opposing the bill because its tax increase on U.S. multinationals would hit manufacturers harder than the benefits in the bill would help the industry.
"More than half of all manufacturing employees work for U.S. multinationals," Dorothy Coleman, NAM's vice president of tax and domestic economic policy, told The Hill in July. "So imposing a tax increase on them is not going to help job creation."