Money is shifting outside the US — Intel

SAN FRANCISCO: The United States faces a losing battle for new semiconductor factories if it does not compete against other countries with tax incentives, Intel Corp. President Paul Otellini told a presidential advisory panel on tax reform on Thursday.

"The money is shifting outside the United States," Otellini said, referring to semiconductor makers building new plants elsewhere to take advantage of tax and other incentives.

Taxes in the United States increase the cost of building and operating a new chip plant by $1 billion, compared with the cost of building and operating a plant abroad, said Otellini, who will become Intel's chief executive in May.

Intel, the world's largest chip maker, is relentlessly lobbied to locate new plants outside the United States and the company can not afford to ignore incentives dangled in front of it by other countries, Otellini said.

He said the United States must make its corporate tax structure more competitive.

Ireland has a 12.5 percent corporate tax rate, compared with a 35 percent rate in the United States; some Asian countries offer to waive their corporate taxes for long periods to attract chip makers, he noted.

Additionally, Otellini urged the panel to support making permanent the federal research and development tax credit.

The panel, led by former U.S. Senator Connie Mack, convened in San Francisco to hear from business leaders, academics and economists, including Milton Friedman, on how the U.S. tax system affects economic growth.