Would Changing the U.S. Tax Code Prevent Jobs From Leaving Indiana, Or Is Senator Clinton Speaking Nonsense?
I would say that Senator Clinton is mostly speaking nonsense, but the more important point is that NPR listeners would have heard this reported as an effort to help Indiana workers, along with cutting the gas tax over the summer. They never raised any question as to whether this was a serious policy proposal. My reason for saying that the tax code is largely irrelevant to firms’ decisions to move jobs overseas is that any tax preferences tend to be a very small factor in location decisions. Firms ship jobs overseas because they can pay workers $1 an hour, instead of $20 an hour in the U.S. They are some quirks here and there in the tax code that can provide frosting for firms that ship jobs overseas, but there are also quirks that encourage them to keep jobs here. If President Clinton devotes a whole 8-year term to eliminating the quirks, it would probably make less difference to jobs in Indiana than a 1 percent decline in the value of the dollar. Of course the value of the dollar soar
