According to Ashok Rao, Harvard’s ignorant gay-bashing bloviating right-wing infotainment historian got this one very wrong.
But the data actually collected by Michael E. Porter and Jan W. Rivkin (paywall), based on a survey of nearly 10,000 Harvard Business School alumni about their experiences with location decisions involving the United States, are in fact revealing. In contrast to what we hear on a regular basis from corporations and business lobbyists (which I then hear repeated on a regular basis by students and friends), lower taxes are NOT high on the list of reasons for moving offices and plants outside the United States. Instead, the top 5 reasons are lower wage rates (by a wide margin) and then proximity to customers, better access to skilled labor, higher productivity of labor, and faster-growing markets.
Now, corporations will lobby for anything they can get (including lower tax rates) but, in the end, that’s not the main reason they choose to relocate activities from the United States to other countries. The bottom line: the goal, as always, is higher profits.