Obama Proposes One-Time Tax On $2 Trillion US Companies Hold Overseas 825
mrspoonsi writes with news about a new proposed tax on overseas profits to help pay for a $478 billion public works program of highway, bridge and transit upgrades. President Barack Obama's fiscal 2016 budget would impose a one-time 14 percent tax on some $2 trillion of untaxed foreign earnings accumulated by U.S. companies abroad and use that to fund infrastructure projects, a White House official said. The money also would be used to fill a projected shortfall in the Highway Trust Fund. "This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely," the official said. "Unlike a voluntary repatriation holiday, which the president opposes and which would lose revenue, the president's proposed transition tax is a one-time, mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated." In the future, the budget proposes that U.S. companies pay a 19 percent tax on all of their foreign earnings as they are earned, while a tax credit would be issued for foreign taxes paid, the official said.
Double Irish (Score:5, Interesting)
This is clearly aimed at companies abusing the "Double Irish" system. Seems like the rate should be set much higher, so that companies are punished and lose more than they would if they did the right thing and repatriated profits and paid the normal tax rates on them.
Re:Double Irish (Score:4, Insightful)
This is clearly aimed at companies abusing the "Double Irish" system.
Probably but I don't see how it will work. What is to stop companies registering themselves elsewhere so that they are no longer US companies and then only their US operations will get taxed? Even if this strategy does not work they have an army of lawyers using the legal system of every country in the world to figure out workarounds that will work.
Re:Double Irish (Score:5, Informative)
What is to stop companies registering themselves elsewhere so that they are no longer US companies and then only their US operations will get taxed?
That's what the Double Irish it, it's what they are already doing. Apple in the US pays massive fees to an Irish shell company for use of the name Apple, and thus makes very little profit in the US that can be taxed. The only tax they do pay in the US is on their US operations like income tax and sales tax. The Irish company pays no tax at all.
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The tax they did pay was on stuff they couldn't dodge, like employment taxes, sales tax and taxes on physical assets. There was a lot more tax that would have been due on their global profits that was dodged by wiping those profits out with massive fees paid to the Irish shell company. The profits were converted to those fees and moved to Ireland, where they are not taxed
Re:Double Irish (Score:5, Insightful)
What is to stop companies registering themselves elsewhere so that they are no longer US companies
Obama's solution is to make the laws even more restrictive by banning companies from leaving. Basically, erect a "Berlin Wall" for business. Of course, this is economic insanity, but it wins him plenty of applause from the Elizabeth Warren wing of the party. Here is an article [economist.com] that explains the issues pretty well.
Re:Double Irish (Score:5, Insightful)
Ultimately, all taxes are paid for by taxpayers. Whether it's directly through income and sales taxes, or indirectly through corporate taxes which get passed on to customers as price increases and employees as pay cuts (or smaller pay raises). The end result is the same - less money for taxpayers, more money for the government.
You can argue that we need more taxation. But never make the mistake of thinking that taxing corporations has zero impact on taxpayers. It has exactly the same economic effect as directly raising taxes on taxpayers. The only thing that gets changed is who gets blamed (people curse the companies for raising their prices, instead of the government for collecting so many taxes).
* Numerical example for people who still don't get it. Say you make $50k/yr and pay $10k/yr in taxes, thus leaving you with $40k/yr to spend on yourself. The country changes law eliminating income tax, and getting all funding from corporate taxes instead. Do you think you'll now get $50k/yr to spend? No. Companies now have to pay an extra $10k/yr per citizen in taxes. So either your pay gets cut to $40k/yr, or prices increase 20% which after adjusting for inflation leaves you with $40k/yr just like before. You see, average real income is purely a function of productivity. And changing how taxes are collected doesn't change average productivity per capita. So where from the economy you extract taxes can't change the amount of real take-home pay. It's all just shell game.
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You're assuming companies must operate at a fixed profit level and have price setting powers--most do not.
Consider the opposite scenario--if we suddenly lowered corporate taxes to zero. Would corporations pass these savings along to consumers by lowering prices and increasing wages? Perhaps to some degree, but in a non-monopolistic market, prices are dictated more by supply, demand and competitive pressures. Companies may use the extra money to pay down long term debt, invest in property, plant & equ
Re:Double Irish (Score:5, Insightful)
Reaganomics is opportunity.
Really? Then why is upward mobility among US citizens the lowest is has ever been in the history of the country?
Re:Double Irish (Score:5, Insightful)
All it will do is cause US companies to become foreign companies incorporated in other jurisdictions. And then there will be less taxes collected. There are reasons why these things have not been addressed already and contrary to what some may think, they have little to do with politicians being paid off.
This is little more than posturing for the 2016 elections. No one expects anything to be done about it, just a lot of hype to define sides and make up short comings noticed in the last election.
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They wouldn't have to abandon anything. I do not know where you got that idea from. Toyota has all sorts of production assets in the US but they are a Japanese company. Likewise with BMW, and Audi. Lots of companies are like that.
They will, as they do now, pay taxes on their economic activity within the US. The difference is that the money outside the US will never be patriated within the US and never subject to any US tax. Their foreign entities will no longer be subject to embargoes the US imposes
Re:Double Irish (Score:5, Interesting)
they could pull an Apple and issue bonds in the EU to raise money that can be repatriated to the US without taxation and then repay those bonds in Euros held over seas.
Re: Perfect way to drive "US companies" out of the (Score:4, Insightful)
Re: Perfect way to drive "US companies" out of the (Score:4, Interesting)
Re:Double Irish (Score:5, Insightful)
I'm not glad to see it at all. It's simply an extension of America's weird world view that they should be owed taxes on money not earned in America.
No other country has this odd view, instead, money earned abroad is taxed abroad.
The US tax system also has weirdnesses like this for anyone who's a dual national or green card holder... Dual US/British citizen and earning money in Britain? Great, you'll be paying both UK and US income tax on that!
Re:Double Irish (Score:5, Informative)
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That is not true. Please don't mark him as informative. You are only taxed abroad if you remain an Australian Resident while working abroad.
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Australia also holds that view on personal income for Australian citizens on money earned abroad.
It needs to be noted that this is only if you're living in Australia whilst earning money overseas.
If you live and work in London as an Australian citizen you dont have to pay tax to Australia on what you earned in London. You're considered a non-resident in this case and only the income you earn in Australia is taxed by Australia.
This is quite different to the US system where US citizens who permanently live abroad are still taxed on their income regardless of source.
Re:Double Irish (Score:5, Informative)
read it carefully, they will tax American companies for earning tax and then give them a tax credit for any taxes paid by those companies overseas.
So if you pay tax at 19% in the UK, America will tax you at 19% as well and then give you a 19% rebate. Net result, you pay the due tax in the UK at 91% and all's well.
Of course, if you don't pay any overseas tax for whatever reason, then you will still be charged at 19% but you won't have any credit to claim, boohoo sucks that you thought you could get away with paying no tax whatsoever.
Re:Double Irish (Score:5, Insightful)
American companies keeping profits in tax-free nations don't benefit from American taxes? Can you provide even a single justification for that?
Re:Double Irish (Score:5, Insightful)
if the profits were made in tax free countries, so be it.
If the profits were made entirely by employees working in that country, selling to people in that country, goods or services produced in that country, then you might have a point. In most cases, they're made from employees working in other countries, selling in other countries, and doing various tricks to book the income somewhere else.
No one objects to companies that are based in the Cayman Islands, working and selling there, paying no tax. People object to companies in the US and EU doing business there and benefitting from the infrastructure yet somehow paying a wholly owned subsidiary in the Cayman Islands a trademark license that happens to be of equal value to their total profits (or one of the various other similar dodges).
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A flat tax wouldn't change a thing if there are no domestic profits and the money that would be profit is paid to an overseas shell company. We wouldn't need to pass convoluted tax laws if companies weren't coming up with even more convoluted ways of bypassing them.
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how about fixing the issues completely instead?
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I know. And when their business is burning down the firefighter fairies just magically appear to make things better.
Re: Double Irish (Score:3)
Re:Double Irish (Score:5, Informative)
No they don't, they transfer the money to the country with the least tax and pay it there.
How? they set up in the lower tax country and charge an expense to the US country.
E.g. say a company earns $1,000,000 the overseas office charges them a $1,000,000 for an admin fee. so the company ends up paying tax on $0 in the US, and tax on $1,000,000 in the company with the low tax rate.
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The company is free to leave the US and stop doing business there if they find the taxes too harsh.
Re:Double Irish (Score:5, Insightful)
No, because you will always be undercut on the rate by countries which don't have to support such an extensive infrastructure (because they don't actually physically host those companies, other than a tiny office to claim legal presence), but which are interested in driving the rates down because that way they get to be the ones collecting them.
Of course, if you are one of those people who think that taxation is theft, all your points are going to be worthless within the context of this discussion. What does it matter to you whether it's US or Ireland "stealing" the money?
Re:Double Irish (Score:5, Informative)
The problem is that this money is not exclusively earned abroad. Large companies can easily setup shell "holding" companies that own their IP licensing and use transfer pricing to pull fund legitimately earned in countries where they would owe tax out to the tax havens by use of internal licensing fees. And since the US corporate taxes are on profits and not revenue, this internal transfer of funds is heavily abused by anyone with a half-way competent accounting department.
Overly Simplified Example:
Revenue: $100M
Fictitious Licensing Cost of already developed internal system: $80M
Staffing Costs: $10M
=============
Taxable Income: $10M instead of $90M
Effective Tax: $3.5M instead of $31.5M
Evaded Tax: $28M
Re:Double Irish (Score:5, Interesting)
When limited liability corporations were first proposed, the biggest opposition was due to, "If the corporation commits murder who goes to jail?". Corporations must be taxed, and then the dividends paid to the shareholders must be taxed again, and when the dividends are spent we will assess them sales taxes again, if the post-tax dividend is used to buy a home, we will tax the home year after year.
We have coddled the tax evaders and their apologists for far too long. Government can tax anything for any reason. We will use it to the fullest extent. Don't like it, go somewhere like Somalia and conduct your business. Good riddance.
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We "must" tax the corporation? What kind of goal is that? Do you see the end-goal of a government as being to tax everything it can as much as it can? Many people do, it seems.
How about, instead, the government works to grow the US economy as much as possible. More jobs, more income, the tax revenue thing will work out OK in the end.
. Don't like it, go somewhere like Somalia and conduct your business. Good riddance
No, you fool, how about we have more jobs here instead of your befuddled plan? Only a statist cares more about taxes than the health of the nation.
Re: Double Irish (Score:4, Insightful)
Did you have an argument to go with that assertion?
No system of taxation has ever gotten federal revenues above 19% of GDP for long, and corporate taxes are a fairly small portion of federal revenue to begin with. We only tax corporations out of some sense of social justice, not because it's a useful way to fund the government. The key ingredient to "saving the country" is to spend less that we actually take in in federal revenue. We can hypothesize all day about what might happen with some new tax plan, but long term if we don't spend less than we make, it will end in tears.
The proper goal and aim of the government is not to feather its own nest with larger taxes in the first place, but to grow the economy! I give 0 fucks whether corporations pay taxes here or not, the important thing is whether the incentives are to have jobs here or not - especially well-paying high-skill jobs! And each and every law that makes it more expensive to do business in America detracts from that,
But perhaps you had an argument along those lines?
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Gas tax is not even close to covering the maintenance costs of the roads in US.
And while the immediate beneficiaries of healthcare, education etc are individuals, corporations most certainly do benefit from a healthy and educated workforce.
Generally speaking, social stability that is provided by strong governments is conductive to good business, and the lack of it is detrimental.
Re: Double Irish (Score:3)
The issue is that US Corporations are using foreign shells to shelter profits in jurisdictions with significantly lower tax rates. In essence, they're claiming that their subsidiaries based in Ireland (for example) are immensely profitable -- at a rate of only 12.5% -- while their North American operations claim hundreds of millions in R&D and management expenses to reduce tax paid to Uncle Sam.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Informative)
Nobody's talking about "taxing other countries".
US law says that, if you're a US citizen, you're liable for US taxes. Doesn't matter where you live or where your money comes from. However, it also recognises that it's not nice to subject citizens residing overseas to double taxation--so if you live in $country and pay $country's taxes on your income there, the US will often accept this as having fulfilled your obligation. But if you've income that you're not paying taxes on, anywhere, and the IRS finds out, they will come calling.
What Obama is apparently intending is to extend this philosophy to US corporations, which currently enjoy a much better deal than you or I. They pay US taxes on profits reported in the US. They don't pay US taxes on profits reported in other countries--and here comes the important part--even if they report those profits in $nation, which happens to have negligible or even zero corporate taxes. Whereas, if I move to $nation and they don't make me pay income tax there, then I get to pay it to the US.
So corporations currently get a huge overseas tax dodge that you and I don't. Quoth TFS,
In the future, the budget proposes that U.S. companies pay a 19 percent tax on all of their foreign earnings as they are earned, while a tax credit would be issued for foreign taxes paid, the official said.
So in other words, US corporations making money overseas would be subject to taxes on it in a manner very much like how US citizens are already subject to their overseas earnings, and with same proviso that they won't be doubly taxed.
Okay, go ahead and explain how this is "retarded" or unfair. Seems pretty smart and fair to me.
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Aw, crap, that should have been "very much like how US citizens are already subject to US taxes on their overseas earnings".
(And I even used Preview, dammit.)
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The difference is that corporations (US C Corporations) are the imaginary invention of people, and this is also why they should not be taxed.
I imagine that all my corporations are in tax-friendly, business-friendly domicile. And if such a domicile does not exist, then imagine harder! This is the present state of corporate earnings management.
People, on the other hand, receive all the benefits of corporations. These benefits accrue as transactions, wages, dividends. Transactions and, to a degree, wages and d
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Because the tax on citizens is already retarded and no other country is that retarded. The fix is to get rid of that retardation, not spread it to corporations.
*That* is an argument that is very possibly worth making.
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Embassies? Military protection? Original education, roads, and infrastructure that got you overseas, rather than keeping you in a hovel in a ghetto? If you don't want to support the country, give up your citizenship. Then you don't need to worry about the US or its taxes or laws unless you come back.
Give up your citizenship, and you get to pay a tax on all assets immediately payable at that time. Even if those assets were 100% earned AND held overseas. Even if they were "received" via marriage. Marry a wealthy foreign citizen and decide to change citizenship? You get to pay an expatriation tax on their holdings they had before your marriage when you give up your citizenship...
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
Because hiding your profits overseas is some sort of essential liberty, right?
The profits were earned overseas, mostly from products and services created by non-Americans and sold to non-Americans. There is no rationale reason for America to be taxing these profits. No other country has this kind of extraterritorial tax. Most economists agree that it is counter-productive, and just encourages companies to base their headquarters somewhere other than America. Business taxes should be based on where the economic activity occurs, not where the business is registered.
Anyway, this proposal has ZERO chance of passing a Republican Congress. This is about electoral politics, not tax policy. The loser here is Hillary Clinton. To win in the general election, she has to position herself as a moderate centrist, that can win in the Midwest, and maybe even pick off a Southern state. But by steering the Democratic party into hare-brained anti-business claptrap, Obama is diminishing her ability to do that.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
You're completely off-base on the Hillary thing. To help Hillary, Obama need to take the party further left. It relates to the concept of the Overton window [mackinac.org], the range of ideas that the public sees as palatable "centrist" positions. If you drag the dialog of the extreme edge further, then it makes less extreme ideas seem more reasonable. The Democrats need to get on this, as the right has been doing this for some time. People like Limbaugh and Hannity push the edges out so their candidates don't have to.
By pushing "anti-business claptrap" Obama gives her room to distance herself from him, room she can use in the election as she sees fit.
Personally, I don't feel that closing tax loopholes exploited by multinationals is "anti-business", more like "pro-fairness", if you allow one business to cheat, you force all to cheat to stay competitive.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:4, Insightful)
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Liberty means no ex post facto laws. Earnings made before passage of any such law (which, let's face it, will NEVER pass with the current Congress - whether you agree with them or not) should be excluded from this. If the Government can retroactively tax your profits,
This isn't a retroactive tax.
There's no ex post facto involved.
You see, the trick is that technically, all the money held overseas is deferred income.
The IRS said "you don't have to pay your taxes until you bring the money back to US shores."
The corporations said "Cool, we'll bring it back. No really, we will. But how about we pay you less when we bring it back?"
As a result, the incentives for repatriating foreign profits are completely upside down and backwards.
It makes far more sense to dodge US corporate
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
I thought it was the corporations stealing by leeching off society and then not paying the membership fees. If they don't want to pay any tax they are free to leave society and stop stealing our free education and training, healthcare, roads, police and judicial services etc.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
If they don't want to pay any tax they are free to leave society
Wrong. They are not free to leave. The Obama administration prevented AbbVie from leaving, and is fighting efforts by other companies to leave.
stop stealing our free education and training
So if an Italian buys a car from a factory in Britain, he is "stealing education" if he doesn't pay tax to America?
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
Almost all of the design and administration of Apple is done in California. But surprisingly the "Company" is a foreign company where they have no factories, no designers, no corporate officers and just a bank account.
So yes, by using the talent and ingenuity of US workers and then claiming that they're an Irish Company they are stealing the value that US Society has invested into its workforce (and supplied the infrastructure for that workforce to get to the job site etc).
Personally I believe that we should tax not based on where they are located but where most of the value is created. If you are Microsoft and 90% of your workforce is in Washington State but you are incorporate in "Nevada" because you have a PO Box there then you should be taxed at 90% Washington 8% California and 2% Nevada tax rates. Similarly if 80% of your operations are in the US then you are 80% a US company and 80% of your revenue is taxable under US tax law.
Everybody knows that Apple is a California company. To say otherwise is dishonesty. It might legally be correct that Apple is a subsidiary of an Irish shell corporation but they're cheating the system and doing something that doesn't pass any sort of sniff test of truthfulness.
Re: Double Irish? TAX ALL FOREIGNERS!!! (Score:4, Insightful)
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When clever accountants figured out that they can just make up inter-company fees in order to make it look like the company is making money in Ireland when all their actual customers live in the US. Seriously, the title of this thread is "Double Irish" - look it up.
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Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
Roman, go spend some quality time in the library (at taxpayer's expense, mind you) and read up on some history. Look at how well neo-anarchists have provided for the 'general good'. Look up some actual, functioning examples of libertarian philosophy.
And if you find any, come back here and tell us about it.
Yes, capitalism is pretty screwy. Doesn't work well. Not a stable system, needs lots of inputs to keep from feeding back on itself and destroying everything in sight. No, this 'civilization' will not last forever and has a number of major issues with it at the moment.
But your goofy system won't work beyond a 12 pack of brownies.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:4, Informative)
Free market is exactly absence of government...
Sorry but that's the Fox news definition.
"Free" - as in anyone is free to participate in the market.
"Market" - A set of rules governing trade, normally created and enforced by governments, eg: property law.
In other words the all too common Fox definition of "free market" is actually an oxymoron.
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Well, foreign earnings will not come back to USA at all ever of-course and all the companies have to do now is start moving their headquarters from the USA.
Yes, that's exactly what will happen.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
Stolen, huh? So I assume you would rather the government dissolve, leaving no infrastructure, no property rights, and no justice system? You'll have to staff your own protection, since you don't want police or military defense. I guess the biggest guy wins... hope you like that new dictator.
But then I suppose you wouldn't care for that so much. You might at least want to form an alliance with your family and neighbors. Perhaps you'll agree not to steal from each other, and have the toughest men keep watch over the town and keep the dictator's army out. But they need to eat and can't keep watch all day while also worrying about growing their own crop, so the town decides that everyone should give part of their goods in exchange for the protection.
Then your town and others nearby might decide, we are reasonable folk and aren't each other's enemies. So you form an alliance and pool your resources to focus protection on the outer borders. Oh and since one town has a great market for clothing, and another has a nice oil well, and yet another has fertile land, now you need roads to travel between the towns. You pool your resources to help built those roads.
This is a system of government, funded by taxes. It is the inevitable outcome of humanity, and will continue to grow bigger so long as the people are mostly satisfied with that government.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:4, Insightful)
Infrastructure is not a government concern
Infrastructure is a property rights concern. Property rights is a government concern.
Justice system and property rights do not require centralised governments, each locality can deal with it however it wants
So property rights is a government concern, just not a centralized government concern? I can see that logic. But then how do we deal with a citizen of town A owning land and things in town B? And how does the justice system handle the case of someone in town C coming to town B to steal things from the citizen from town A?
We could set up treaties between the towns, and have a documentation system to provide proof of citizenship and other details that matter. As for me, I like being able to drive to the next town to shop or eat or whatever I do, without needing to go through border checks.
thus if you want to use a road or have protection against attacks by bandits, that's your responsibility to hire your protection and to pay your road tolls
Golly, that's just what I want! To pay a body guard to ride with me in my Hummer with machine guns. And to have to stop to pay at every - single - entrance into every road, and from every road.
Actually no, that's not at all what I want. I want my 10-mile commute to take 15 or 20 minutes, not 3 hours waiting in lines at toll booths. I want to pay a reasonable amount of money for my drive, without having to pay by-the-hour for some guy to protect me as I drive down the road.
I don't like everything about our society. I don't care for many things our government does. I would change a lot of things if I had my way. But at the end of the day, I feel that all of that is relatively minor compared to truly horrible dictatorships where the people have no rights, no freedoms, poor health and are daily in fear for their lives and for the lives of those they care about. We should fight to make sure our society doesn't degenerate in that direction, but its useless to throw it all away just because it's not perfect.
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:4, Interesting)
.
Inventors, both native and foreign born, live in the U.S., after being educated in U.S. universities, using U.S. infrastructure and support networks. They land jobs with U.S. companies to invent, develop and sell products to U.S. citizens. The U.S. patent rights on those products are sold to a foreign company which then charges the U.S. corporation a high royalty. The patents are only valuable because of the extensive U.S. patent system which protects the intellectual property of inventors and their corporate assignees, foreign or domestic. The foreign shell company makes all of the profits in a small country with tiny or non-existent taxes. The U.S. company claims all the royalty payments as expenses, wiping out U.S. profits. Here is one example of many. http://www.usatoday.com/story/... [usatoday.com] Then, tax attorneys educated by U.S. law schools prepare U.S. corporate tax returns that legalize all of this under laws written by corporate lobbyists for the benefit of U.S. corporations. Then the U.S. corporations control their media subsidiaries (ABC, NBC, FOX, CBS), to try to justify all of this. It isn't a perfect plutocracy, so they must pay P.R. firms, pundits, and think tanks to convince people like you that Barack Obama is a socialist trying to steal their money, and that his 14% tax proposal to pay for U.S. highways is wildly unfair double taxation.
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But by all means. Go ahead and keep watching Fox "News". It is your right. Rupert Murdock's interests are undoubtedly aligned with the long term interests of U.S. citizens. I'm sure the republic will limp along just fine if all its citizenry are too busy to discover anything resembling the truth. And don't worry your little head. Obama's proposal has zero chance of being passed by either the corporate-controlled House or Senate. Even if I changed your mind (which I am certain I have not), there are millions upon millions out there who will listen to corporate sponsored political commercials and vote to keep either the corporate-backed republicans or corporate-backed democrats in power. I can't convince them all. They won't see this post, or visit my website. It is simply TLDR. You have won the argument. Congratulations.
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And in what sense are they "conceived and developed here in the US"? A large part of US R&D staff is immigrants to begin with.
Furthermore, if you think that this entitled the US to grab lar
Re:Double Irish? TAX ALL FOREIGNERS!!! (Score:5, Insightful)
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Well then you're fucked, because no society like that has ever existed, or ever will exist.
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You are getting services and you pay for it through taxes. This does not fit any sensible definition of stealing. I can see that you are one of those libertarians that operate under the pretense that we would be better off with highways built by private parties for which you would have to pay a fee just like a tax to the government but with the difference that you have no say where it is built.
Fine, you are welcome to believe that. It still does not make takes theft or slavery. They are democratically agree
Re:Double Irish (Score:5, Informative)
If the Obama admin really insists on something like this, then it would probably be best to have a minimum effective tax rate system. I.e. the tax must be payed SOMEWHERE and there has to be proof of that sent to the IRS. If the effective tax rate is below the minimum (say 20%) then they pay the remainder to the IRS.
I guessed you missed the part in the summary where they mentioned the rate would be 19% and "while a tax credit would be issued for foreign taxes paid, the official said." So they are doing almost exactly as you are suggesting.
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I wonder if say Apple would really relocate outside the US. I don't just mean incorporate some shell company like they have in Ireland, I mean really move their operation to avoid paying tax. At the very least the top management would have to go overseas, and would probably want to take their engineering teams with them. They would have to spend a few more billion on a new campus and abandon the one they just erected.
Just to clarify, I was suggesting what you are suggesting. Tax must be paid somewhere. No m
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Fair enough, as long as you're okay with the result: a legal system that grows without bound as it tries to enumerate badness.
Cue the GOP response... (Score:5, Insightful)
It's much more complicated than this... (Score:5, Insightful)
People forget that the United States has one of the highest corporate tax rates in the world, and we impose it on American companies foreign-earned capital if they should bring the money back to the States. If you are responsible to the shareholders to be stewards of their investments, you have to take whatever measures you can to avoid heavier than necessary taxes. Hence people park their money off American shores.
This seems like a cash grab to me, where the better option is to really reform the tax code to be equitable within and outside the United States; then the responsible steward of their investors money would feel more free to have that capital here. 20% of 10 million is a lot more than 35% of zero.
Re:It's much more complicated than this... (Score:5, Insightful)
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Not so if there is only one privately owned highway coming out of your town.
Yes, generally speaking privately provided services are more efficient, but as I pointed out, there are well known exceptions. Usually they have to do with what are at heart either insurance schemes (defense, healthcare) or natural monopolies (roads, utilities).
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Private companies can be incredibly shortsighted too. Around here they built penny-wise pound foolish buildings in the 70s and 80s that are energy inefficient and terrible workspaces but were cheap to build back then. You cannot give that space away.
So again, while I generally agree with the virtues of the private sector, I haven't drank the kool-aid that they are always preferable.
Re:It's much more complicated than this... (Score:4, Insightful)
Of course if you are going to become a multinational company, this raised the incentive to incorporate somewhere tax friendly.
This helps American jobs how?
The Obamacare tax is already limiting premium health care offerings due to the high cost. Lost my health care plan as it was unaffordable and has a higher payment plan than my home loan.
Who can afford two home loans, or a home loan and obama care? Forget shifting the premium onto my tax bill and say you can get it with a subsidy. My tax to pay our subsidy has removed my option for full coverage. I could keep my doctor and keep my plan if I took on a 2nd full time job to support it.
Not an option.
I have considered retiring to somewhere with affordable health care. Would that make me an economic refugee?
Real vs. Imaginary. (Score:3)
This 14% to 19% is closer to the USA's 'real' tax rate, which has so many loopholes that it's actually lower than most of the developed world.
People love to harp on the fact that the USA's corporate tax rate is so high, but it truth with all the political rewriting of the corporate tax rate its fairly low.
And then you have companies like Apple doing their all out best to not pay taxes at all.
The last is what Obama is trying to remove. And Republicans/Fox News and it's handlers are going to try their level b
Re:It's much more complicated than this... (Score:4, Insightful)
Only those that have diversified assets and the ability to move them into different vehicles (transfer pricing [wikipedia.org] is a key product in accounting firms). A lot of companies pay the full amount.
Ireland will love this (Score:3)
A number of U.S. based companies have already purchase, merged with, and become subsidiaries of Irish companies. That makes profits made in the U.S. "foreign income", and everything outside the U.S. untouchable, because it will never be "repatriated".
The price of companies incorporated in Ireland is going to skyrocket even higher than it has.
Re:Ireland will love this (Score:5, Informative)
Can't happen. (Score:2)
What's the legal basis? (Score:3)
In the future, the budget proposes that U.S. companies pay a 19 percent tax on all of their foreign earnings as they are earned
I wonder what the legal basis of this would be. Multinational companies that are interested in minimizing their taxes (and let's face it - who isn't?) already are incorporated elsewhere, and their earnings on U.S. operations are already taxed in the US. So, exactly what "U.S. companies" have substantial "foreign earnings"?
For example, if a corporation is incorporated in Switzerland, pays taxes it earns on Swiss operations to Switzerland, pays taxes on its U.S. operations to the U.S., and pays taxes as required by Swiss law on earnings made elsewhere, what else is there for the U.S. to tax?
Even when democrats controlled the senate.... (Score:3)
....they never took Obama's budget proposals seriously. I'm not sure why the rest of us should even bother paying attention.
Can other nations do that? (Score:3)
What makes a company a "US company?" (Score:2)
Is registration enough? Are there advantages to being a US company? What does Apple, which I assume is a US company lose if it suddenly became a "UK company?" Anyone know?
That would require congress to sign off on it... (Score:3, Insightful)
... and he has zero pull there... so... he can write executive orders and talk to foreign leaders and engage in 'police action' wars... but... he cannot pass tax policy.
If he ACTUALLY... seriously... wants to pas a tax bill... then he has to talk to congress first. And... he hasn't done that in awhile.
"one time" (Score:2)
maybe its good maybe its bad, but when bureaucracy is involved there is no such thing as one time.
And he wonders why there's no wage and job growth (Score:2, Insightful)
He Knows It'll Never Happen (Score:4, Insightful)
Mark my words, as we get closer to the election, he'll start breaking out the big guns. I'm sure he's already planning to talk about reproductive rights and race relations at some point along the way. I'm surprised he played immigration as early as he did but I'm sure it's going to come up again. I have to admit he surprised me on Cuba. Definitely didn't see THAT one coming.
Define "overseas profits" (Score:3)
I can understand trying to get companies to stop gaming the system by shuffling their US profits to overseas holding companies to avoid taxes, but is this what this proposal is actually doing? If it is I'm all for it, but somehow I wonder if this is trying to tax overseas profits from overseas sales simply because the company is US owned. There was a raft of articles a few years back about US citizens having to renounce their citizenship because they were being taxed at obscene rates despite the fact that they didn't live, work, vote or even visit the US. Maybe its my latent paranoia but I wonder if this is the corporate version of this.
Who's the one with an Army? (Score:3)
Re:Windfall taxes are a crap idea. (Score:5, Informative)
It's well understood what they are doing, because the companies are quite open about it. Back in the 90s Apple invented something called the Double Irish, which is where they register is shell company with no employees or other interesting in Ireland and have all the other Apple corporations around the world pay their profits to it in exchange for using the Apple name. Starbucks, Google, Amazon and others all do the same. Since the local corporations don't make any profit (due to the "crippling" fees they pay to Apple Ireland) they pay next to no tax.
So why doesn't Apple Ireland pay tax on all the money it takes? Irish law states that corporations that are headquartered overseas pay corporation taxes where their headquarters are. So Ireland says they pay in the US, the US says they pay in Ireland... and thus they pay no tax on all that money.
Of course they are quite open about this and list the money held in Ireland as part of their balance sheets. Apple is currently taking low interest loans to pay shareholders based on the vast reserves it has in Ireland, rather than bring some of that money back and pay ~40% tax on it.
The EU is working on a fix where corporations pay tax based on how much business they do in each country. This seems to be the best that the US can come up with, given the political climate.
Re: (Score:2, Informative)
It's well understood what they are doing, because the companies are quite open about it. Back in the 90s Apple invented something called the Double Irish, which is where they register is shell company with no employees or other interesting in Ireland and have all the other Apple corporations around the world pay their profits to it in exchange for using the Apple name. Starbucks, Google, Amazon and others all do the same. Since the local corporations don't make any profit (due to the "crippling" fees they pay to Apple Ireland) they pay next to no tax.
Except that's not what Apple is doing. See the fact that Apple US paid 6 billion dollars in US taxes on 18 billion profit.
What Apple Europe (which is in Ireland) does is holds all the profits that Apple makes in countries other than the US, because they can't bring that money back into the US. The US wants to charge a second round of taxes, even though European taxes have already applied.
This is the same thing that the US does to dual nationals - a US/UK dual citizen working in the UK will pay income tax
Re:Windfall taxes are a crap idea. (Score:5, Informative)
Except that's not what Apple is doing. See the fact that Apple US paid 6 billion dollars in US taxes on 18 billion profit.
That is what they told you. The US Senate grabbed Apple's IRS paperwork and found a check for $2.5 billion. [businessinsider.com]
What Apple Europe (which is in Ireland) does is holds all the profits that Apple makes in countries other than the US, because they can't bring that money back into the US. The US wants to charge a second round of taxes, even though European taxes have already applied.
European taxes have not been collected because of the tricks Apple uses. The EU is pursing Apple for dodged taxes as well. [ibtimes.com] One of Apple's subsidiaries paid absolutely no taxes at all for 5 years despite $30 billion in profits. $0 taxes, $30 billion profit.
This is the same thing that the US does to dual nationals - a US/UK dual citizen working in the UK will pay income tax both to the UK and to the US, because the US thinks they're entitled to taxes on money made abroad.
Does said US citizen get to hold his US passport? Does he get to use US Embassies? Will he be rescued by the US military if kidnapped in Iraq? All that costs money. And the guy gets to deduct from his US tax bill anything paid in the UK anyways.
The reality here is that what should change is the US's policy of taxing all money everywhere, whether or not it ever had anything to do with the US.
As long as it has nothing to do with the US.. I agree the US shouldn't tax it. Last time I drove through Cupertino though, I'm pretty sure I saw a giant Apple logo behind a bunch of people carrying Apple Ids. At least one of Apple's Irish subsidiaries has zero employees though.
Re: (Score:3)
Possibly.
Ditto
BLOCKQUOTE>Will he be rescued by the US military if kidnapped in Iraq?
Extremely unlikely.
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Possibly.
Ditto
BLOCKQUOTE>Will he be rescued by the US military if kidnapped in Iraq?
Extremely unlikely.
I lived in Venezuela during the military coup of 2002. The US embassy actually did make arrangements to potentially helicopter out US citizens if the situation got bad enough. So they do look out for US citizens abroad, when possible. I would call in twice a day to determine whether or not I was supposed to try and escape the country. And no, I was not a US Government employee there at the time.
Re: (Score:2, Interesting)
Re:If they were balancing the federal budget (Score:5, Insightful)
That is exactly right.
Social Security and Medicare costs are only going to get worse as our population ages. And those costs are what is really tanking the federal budget. Not welfare queens or other conservative mythical leaches on society.
And over the past 20 years, our wages have declined and our standard of living has declined also - but worker productivity has gone through the roof.
Big business and the billionaire class has taken the difference and none of that has ended up in the workers hands. We are working longer and harder and our lives are getting worse.
That $2 trillion represents part of that difference.
Re:Did Obama literally just say... (Score:5, Insightful)
"to avoid paying their fair share"
That phrase "fair share" is dishonest. It is vague and subjective, while pretending to be objectively normative.
Re:Did Obama literally just say... (Score:5, Insightful)
That phrase "fair share" is dishonest. It is vague and subjective,
A tax code which permits corporations to hide profits while taxing citizens normally is dishonest.
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Of course not. Obama has no expectation that this will ever pass. It's a rhetorical club to beat the Republicans with.
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1.The Republican Congress will never approve this idea. Never. 2. Europe closing tax havens? Africa is ripe to be next with new tax havens and super cheap manufacturing centers.
Does it really matter if the Republicans will approve of this? Perhaps Obama knows that every single Republican congressman is now getting frantic phone calls from every rich Ayn Rand reading jerk that ever contributed to his campaign. Obama also knows that taxing the rich is probably not going to bother the electorate that much. The common working American like any other working class person derives a certain amount of 'schadenfreude' from watching rich people squirm. The is especially the case if those ri
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Thank God for #1. This is a bad idea--giving a Liberal more money for whatever "reason".
As opposed to what? Giving a conservative a pile of money which he uses to start a totally unnecessary war in Iraq that cost 4488 soldiers their lives? Look at what a success that turned out to be!!
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Yes, what about the rest of the federal government's spending, of which military spending is not even a third. Social entitlement spending is what the vast bulk of your federal taxes and borrowing go towards, not aircraft carriers.
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wrong, this is a tax against U.S. companies based on juristiction within the USA alone. It is the same as requiring U.S. citizen to pay U.S. income tax rate on any income from foreign company. It is of no concern to foreign companies and foreign governments, no treaties needed. These companies are already under the thumb of U.S. governement and must abide by U.S. law
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In the very long term, the burden is likely to be shifted in part to labor, if the corporate tax dampens capital accumulation.
Labor doesn't pay taxes either. Take more out of my paycheck and I'll buy less of your (corporate) junk.
It's silly to think of someone or something paying taxes. Its all a cycle and taxes represent a drag or inefficiency in the transfer of funds no matter where they are applied. Common sense (and equity) demands that we spread the tax burden across as many transfer events as possible. That means personal as well as corporate income taxes.
The point that many people are missing about this 'Obama Tax' is th
Re: (Score:3)
So now you have no benefits that aren't costing you tax from your salary too. So the value of the benefits plummets and thus people just demand a higher salary instead. Which, believe it or not, costs you more - the point of the incentives is that the person couldn't just earn that amount of money extra and get that incentive themselves anyway, it works by having expensive one-offs that mortals couldn't afford, and them remaining company property, etc.
You can't make outsourcing illegal. It's just a legal