A glimmer of hope for America?

goingbroke

Obama: End tax breaks to stop overseas hiring
At issue is a bill, in the Senate, that would do away with some tax credits and deferrals for U.S. companies for operations abroad.

jobs!

MoneyCollector

Just what are the "tax breaks" that US companies get? What is in the tax code that favors earning money overseas vs. here in the US? Sounds like more polital BS to me.

goingbroke

the U.S. tax code allows domestic companies to defer taxes on “unrepatriated income.” In other words, revenue that companies earn through their overseas subsidiaries goes untaxed by the IRS as long as it stays off the company’s U.S. books . The tax code is written in a way that allows companies not to pay the full 35% U.S. corporate tax rate on foreign income when that money remains invested overseas.
Backing up a step, here's how it works before the loophole: A company earns $100 million abroad in Lowtaxistan where the corporate tax rate is 20%. The foreign subsidiary pays that money to the U.S. parent. The parent then pays $35 million to the U.S. government and takes a credit for the 20% (or
$20 million) payment to the Lowtaxistan government. So the net to the U.S. Internal Revenue Service is $15 million.

But here's how it works with the loophole: The U.S. subsidiary simply keeps the money offshore and certifies to its accountants that the money is invested overseas. It never remits the money to the parent and so never pays the $15 million extra to Uncle Sam.

TomB

<< <i>the U.S. tax code allows domestic companies to defer taxes on “unrepatriated income.” In other words, revenue that companies earn through their overseas subsidiaries goes untaxed by the IRS as long as it stays off the company’s U.S. books . The tax code is written in a way that allows companies not to pay the full 35% U.S. corporate tax rate on foreign income when that money remains invested overseas.
Backing up a step, here's how it works before the loophole: A company earns $100 million abroad in Lowtaxistan where the corporate tax rate is 20%. The foreign subsidiary pays that money to the U.S. parent. The parent then pays $35 million to the U.S. government and takes a credit for the 20% (or
$20 million) payment to the Lowtaxistan government. So the net to the U.S. Internal Revenue Service is $15 million.

But here's how it works with the loophole: The U.S. subsidiary simply keeps the money offshore and certifies to its accountants that the money is invested overseas. It never remits the money to the parent and so never pays the $15 million extra to Uncle Sam. >>



It's a beautiful way of destroying research and manufacturing in the US since the earned income is not intended to come back to the country and therefore cannot go towards new buildings, improvements or employees within the US. Great, isn't it?

mrearlygold

No such thing as a "productive" tax. That's a fallacy. If I were in manufacturing I would simply go elsewhere. Bye bye.

When I started a business in Vietnam I negotiated 3 years of ZERO taxes with an auto-renew for 3 years. And that was/is a simple web development company. China extends up to ( they did at the time ) up to 15 YEARS of zero taxes. That in conjunction with a highly motivated workforce is where it's at and it shows.

The ONLY way to compete with that is to CUT txes to zero to anyone who is willing to open any manufacturing here. ( who is more socialist now! ) However, partially due to the destruction of the value of the dollar, "workers" here need a lot more than a couple hundred bucks a month to LIVE and so we have fked ourselves by allowing government to get as big as it is while whining for even more. Good luck.

Then again maybe a new Berlin Wall will work. Haha.

yellowkid

Our tax code, 3000 pages long as I understand, has been well engineered over the years by the pols, lobbyists and other special interests to benefit those who have the most. It supports an industry that cost 65 billion dollaras a year, with armies of accountants, lawyers and other "hangers on." I think it is a disgrace, I didn't care much for Ross Perot but his postcard size tax return form had a lot of merit.

wpr101

<< <i>Our tax code, 3000 pages long as I understand, has been well engineered over the years by the pols, lobbyists and other special interests to benefit those who have the most. It supports an industry that cost 65 billion dollaras a year, with armies of accountants, lawyers and other "hangers on." >>



Yea this, there would be a ton of lawyers and accountants out of business if the tax code was simplified. The same people hold all the power in America.

America has the highest % of lawyers in high office over any other country.

secondrepublic

I thought this post was going to mention the election coming up in two weeks

derryb

I thought this post was going to discuss Obama Coins.

timcoin

Not to be argumentative, but unless your hope for America is that the government takes more money from the successful, declares war on the free market, and handcuffs companies' abilities to expand, I'd say this proposal would only be successful in making goods more expensive and making government even more bloated.

I have never understood this mentality that some people have in favoring laws that would force others (particularly businesses) to pay more in taxes, especially because it doesn't cost them any more. It seems a little selfish to me. If we really want to raise funds for the United States, shouldn't we all aim to be more productive ourselves?

gsa1fan

Supporting slave labor by "american company's" = NOT ME EVER!

You may take that any way you wish

edited for misspelling I just get PO'd to the max about this subject!!!

Higashiyama

In the long run, US economic growth would likely be facilitated by:

(1) Elimination of corporate income taxes

(2) A greatly simplified individual income tax, with reduced rates

(3) A consumption tax


Under the current system, with regard to the issue of taxing multinational companies, I would argue:

(1) If a company's primary business is in the US, but they are trying to shelter income from taxes using overseas subsidiaries, this is a problem that needs to be addressed, but

(2) It would be a mistake to try to tax the global income of an international company that is incorporated in the US (such as GE). In the long run, that will simply drive companies out of the US.

HalfStrike

<< <i>Obama: End tax breaks to stop overseas hiring
>>



Yes, let's raise taxes on businesses in the worst economy in many decades. This is why unemployment remains very high and nobody is hiring.

greatnortherncoin

keep the flood gates open we have more jobs them people !

TwoSides2aCoin

A sliver of silver is worth more than a glimmer of hope.