I think wanting to lower the tax bracket is certainly fair, but you also have to close the loopholes these companies are using to basically completely avoid paying taxes at all.
Who makes the laws that make these loopholes possible?
Also, is it bad that they figured out a way to pay no taxes? Or, is it bad that they figured out a way to pay no taxes AND they're rich? As an individual tax payer, I always try to figure out ways to pay the least amount of taxes possible. Am I unethical?
It wouldn't affect the direct labor, but it would definitely lower factory overhead. If a company is marketing quality or patriotism, then it will help them stay compe ive by keeping their labor in america. Bill O. thinks that the flat tax will even bring back the companies competing with price. I am not one hundred percent sold on that.
These two paragraphs seem to have been overlooked. Here's where the benefit to lowering corporate tax rates is. It's not about outsourcing. Jobs are going to be outsourced no matter what the corporate income tax rate is. It's about getting rid of the corporate s game companies play to dodge US taxes, and making the U.S. the tax-friendly place for global corporations to park their assets. If it were up to me, I'd cut the corporate income tax rate in half.But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.
Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.
http://www.heritage.org/Research/Com...for-Tax-ReformOther nations have cut tax rates deeply. Ireland doesn't have a flat tax, but it has slashed its corporate tax rate from 50 percent to 12.5 percent. Combined with other tax cuts, this helped turn the "Sick Man of Europe" into the "Celtic Tiger." Unemployment has dropped from 17 percent to 5 percent, and Ireland is now the second-richest nation in the European Union.
Tax compe ion has forced other European nations to cut their corporate tax rates. Indeed, there has been so much progress that every nation in Europe now has a lower corporate tax rate than America -- even socialist countries such as France and Sweden!
Last edited by spursncowboys; 04-05-2010 at 10:30 AM.
What makes you think that would do the trick? Honest question. If I said something like that it'd just be PFA. But for you, I tend to think you'd have a reason for saying that.
Do you?
http://www.ge.com/ar2009/pdf/ge_ar_2009_notes.pdf
To answer your question:
GE is a large conglomerate, mainly manufacturing, although they do also own NBC.
Their operations span most, if not all, of the states having just about $781,000,000,000 in assets.
(NOTE: about 70 bn in "plants property and equipment" i.e. mostly factories of some sort)
The telling part of the recent reduction in GE's tax burden is the nature of the largest portion of that $781bn comes from:
Finanancing receivables: $329bn
They have had a lower tax burden mostly because they have taken a huge bath from the actions of their financing unit, who (suprise!) offered mortgages, both commercial and residential.
http://www.scpr.org/news/2010/01/22/...gns-improving/
The article in the OP does point out the effect of different company tax rates on "transfer pricing" though.
Companies will put costs in countries where corporate tax burdens are high, and profits in countries where corporate tax burdens are low.
The article then goes on to call for a lowering of US corporate tax rates, using the much tauted "fact" that "US tax rates are among the highest in the world".
This is a lie of omission, unsurprisingly.
While that is true for direct corporate income taxes, it fails to capture the entirety of taxes, i.e. coporate+individual and federal+state.
Many of the lower corporate tax-rates in other countries are so low simply because they have different tax systems.
Some have Value Added Taxes (think sales taxes), but no income taxes, and some tax individuals at higher rates, effectively subsidising their corporations to some degree, when compared to the US.
The problem of cost/income-shifting through the transfer prices is one that the US government/IRS has been struggling with for some time, but proves to be devilishly hard to nail down, especially when it comes to companies like GE whose operations are so diverse and global.
Further muddying the waters is the fact that the cost of many government services get "pushed down" to the state and local level.
Many other countries tax at higher rates per capita at the federal level, but have almost no taxation at the state/local level.
This is much easier to do in countries with less geographical area than the US, such as any given country in Europe, where most countries have about the same population/area as some of the larger US states.
I find most comparisons about "we pay more/less taxes than X" to be disingenuous at best. It is hard to fairly compare taxes from one country to another, due to the myriad ways goverments are or aren't funded.
I would lastly note that the countries that tend to have the lowest federal tax rates either provide little in the way of social safety nets, or any other government services, or have massive state-run investment funds that provide large portions of the goverment budget.
So for every dollar earned, how much of that goes to taxes? How does America rank?
I've got a couple of reasons. Cutting corporate income tax rates would have the dual effect of removing the incentive for U.S. companies to hide income overseas through subsidiaries and such, as well as providing an incentive to overseas companies to hide their income here.
Additionally, I think people tend to not think through exactly what it is that companies do with money. A company can't just go out and spoil itself with a huge pile of cash the same way individuals can. A company needs to do something with their cash, be it hiring more people, investing in R&D, paying out dividends, and yes, giving their executives lavish compensation packages. I certainly don't consider hiring (i.e. job creation) and R&D to be bad things. If they pay it out in dividends, then those get taxed at the individual level so the government still ends up getting a cut of that money. Even if the company decides to just give their execs a bunch of money then that money still ends up getting taxed and it gets taxed at a rate higher than what the corporate income tax rate is. In fact, if you're someone who wants as much corporate money ending up in the hands of the government as possible, big payouts to executives is where the government gets to take the biggest bite out of every dollar.
Lastly, people also need to keep in mind that the taxes corporations pay get passed along to individuals. Effectively, corporations aren't the ones paying corporate income taxes, we are. Cut corporate taxes and one of two things happens. Either consumer costs go down, or corporate profits go up and get distributed as described above.
I'm sure my opinion is not a popular one, but I do see a lot of benefits to be realized here.
Actually looked that up.
http://en.wikipedia.org/wiki/List_of...centage_of_GDP
The US is roughly in the middle of the pack overall, and lower than just about any other developed country.
My memory of other similar stats/articles is that the US actually has a total tax burden (federal/state corporate/personal) pretty much on par with other industrialised countries, if a bit lower.
I suspect we are underspending on infrastructure compared to other countries. Both in terms of human capital, and physical.
The US will always be a good country to do business in simply because of the strong rule of law.
Pretty sure this statement is wrong.
Most executive compensation these days is through stock options. Stock options get taxed at capital gains tax rates, much LOWER than coporate tax rates.
I don't think it is much of a stretch. Your "opinion" simply reflects the understanding of such effects on the part of most economists.
I would add:
Most corporate stocks are held by mutual funds or other similar vehicles for saving/investment created to help Americans save for retirement.
Think about the ramifications of that.
Congress. I thought it was plainly stated when I'm complaining about closing loopholes.
I have no beef with the corps themselves other than the fact that their indirect purchase through lobbying of representatives open up loopholes only for them. I mean, you couldn't possibly be so naive to think that Congress left those loopholes there just because they thought nobody would exploit them. Furthermore, now that the loophole is vox populi the only ethical thing to do is to close it.
I'm not a tax accountant so I'll certainly concede a possibility of being wrong. That being said, I thought that the difference between the option price and the fair market value on the date of the option grant got taxed as normal income and the capital gains only applied to the difference between the sale price and the FMV on the date of the option grant.
Then, by all means, call your congressman.
My congressman was brought to me by:
Does anyone think that if we cut taxes and made the tax code easier, enough so to lower the costs from lawyers, accoutants, and equipment, that we wouldn't get back companies?
Companies haven't left in the first place... I mean, they still conduct business here.
Now, if you mean getting back part of their business or their capital, then I would say no. As far as business, we have a compe ive problem, not necessarily a tax problem. As far as capital, well, if with the current rates not only they're not paying, but they're actually getting basically subsidized with a 1B perk, then that's not going to work either.
I think you want to close the loophole and at the same time lower the taxes. If you don't close the loophole, the point is really moot. There's always a small island somewhere that give better tax rates than the US.
The compe ive issue on the business side is much more complicated though.
No no no. You're missing the point ElNono.
Tax breaks fix everything!
I did Mr. Peanut Gallery...
Isn't it possible I wish to bring something else into the mix?
How many times have I said something similar, that reducing or elimination corporate taxes would give us a robust economy... How many times?
You've said it many times...doesn't mean you're right though
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