U.S. Technological Preeminence is Driving American Job Creation and Unprecedented Global Innovation

U.S.-based multinational companies are leading 21st century job creation and innovation.

One-fifth of the total U.S. private sector workforce, 21.7million Americans in 2006, is employed by U.S.-based multinational companies. Generating 25% of the U.S. GDP, these U.S.-based companies drive America's economic growth. Innovations like the PDA, cloud computing, Google, Wiki, Facebook, and Twitter-largely by U.S-based companies-are transforming international business, social networking, and improving our lives. These American-born innovations have provided users with unparalleled access to public and consumer information.

These and other successful American-born innovations have captured an ever-growing global demand for American services and products.

U.S.-based international companies produced more than 25% of all U.S. business output in 2006. And despite recent consumer and commercial budget cuts, the tech sector remains relatively healthy. IT spending increased by 9% in 2006 and by 13% in 2007, making the computer industry one of the fastest growing sectors of the U.S. economy. New U.S. tax policies should aid, not hinder, U.S. companies in the global marketplace. Doing so will keep the U.S. on a sustainable path of economic growth, increase job opportunities and wages for workers, and enhance U.S. living standards for present and future generations of Americans.

U.S. Gizmos and Gadgets have International Appeal

Adding affiliate companies locations near consumers overseas isoften necessary for effective marketing, avoiding trade barriers, and meeting local product and content requirements/specifications.

• Foreign markets represent 95% of the world’s population with over 75% of the world’s purchasing power. If U.S. businesses are not competitive in the global market place, foreign competitors will capture an ever- greater share at America’s expense.
• Sales by majority-owned foreign affiliates of U.S.-based multinational corporations totaled over $4.1 trillion in 2006.

Overseas affiliate revenues benefit U.S. operations and support American jobs.

• Almost 90% of R&D in American is performed by US-based multinational companies. For every 10% increase in sales by foreign affiliates, U.S. R&D investment increases by 5%.
• U.S. companies with foreign operations pay American workers 10-15% higher earnings than comparable U.S. companies without foreign operations. Wage increases at home grow as foreign operations expand.
• American workers in the U.S. tech industry, which is comprised of many U.S.-based multinational corporations, make around 142% of the national average annual wage ($42,270).

Blazing New Trails: Opening New Markets and Driving Down Costs

Selling to new international markets allows U.S. companiesto reduce costs and pass savings along to American consumers.

• To be viable and grow through innovation, U.S.-based multinational corporations must be able to operate in economies of scale—that is, to compete for shares of an international marketplace that is much larger than the domestic U.S. market.
• Emerging economies account for 45% of the global PC hardware market.
• Critical R&D investments by U.S. companies are dependent largely on foreign sales. With sustainable levels of R&D investment, American workers can develop products for future markets and secures America’s place as the world’s leading innovator.

Increasing Costs would Decrease American Jobs and U.S. Competitiveness

Tax deferral gives U.S. companies an opportunity to compete on a level playing field with their foreign competitors.

• The U.S. is the only large economy with both a worldwide tax system and a corporate tax rate greater than 30%.
• If tax deferral policies were eliminated, U.S.-based companies face a significant increase on after-tax revenue. This would provide a competitive advantage to foreign-owned competitors abroad and allow them to reinvest more, raise funds for new investment more easily, and sell products at lower prices than U.S.-based companies.
• Given the borderless nature of 21st century business, the ability to compete globally is a necessity for the success of most U.S. companies.

Increased U.S. revenues abroad generate higher wages and new cutting edge technologies at home.

• It is estimated that U.S. wages increase by $1.84 for every addition dollar paid to foreign affiliate workers.
• Hampering an American company’s ability to compete abroad serves only to decrease their abilityto employ American workers at home. It also diminishes the resources they need to develop the technologies that will drive U.S. economic recovery and long-term growth.

Forty years ago, 18 of the world's largest companies built their headquarters in America. Today, only six of the world's 20 largest non-financial, and three of the 20 largest financial companies, have chosen to be headquartered in the U.S. This alarming trend draws even greater attention to the U.S. antiquated corporate tax system-a system that is driving capital investment out of America to our foreign competitors.

Competitive international tax policies must not be confused with well-intentioned initiatives to close "tax haven" loopholes. To secure our economic future and place in the global marketplace, the U.S. must enact and/or retain tax policies that allow American companies to compete globally. Without such policies, America will no longer be an attractive place to do business.