Comments on: Obama Corporate Tax Proposals Not Met With Enthusiasm (Psst, No one is surprised)

By: Jeff Day

Jeff Day — Sat, 30 May 2009 14:07:43 +0000

Keeping it simple. Let’s see if I understand what the Democrats under Obama’s leadership are saying:

Coca Cola you do not pay enough income taxes. We are going to make you pay more. Coca Cola pays more in taxes, and what happens to the price of a Coke? Who was it, Mr Obama, you said wasn’t paying enough?

Keeping it simple. Let’s see if I understand…… Companies that are getting the bailout aren’t paying their fair share of taxes. Companies that are getting the bailout, aren’t making any money, that is why they need the bailout. So they need to get a larger bailout so they can pay more in taxes. They pay the US Government more in taxes so they can get more in a bailout?

By: Vinny

Vinny — Thu, 07 May 2009 14:36:28 +0000

Solution – get rid of the US worldwide income tax net and move to a territorial system. US companies operating abroad would no longer be able to deduct foreign expenses against US source income. You also eliminate foreign tax credit arbitrage schemes through the blending of income earned in high and low tax jurisdiction. Seems to be compatible with the capital export neutrality standard.

By: Kelly

Kelly — Wed, 06 May 2009 23:39:30 +0000

Quick note: while I agree that the 2% rate is somewhat skewed, most companies who put subs offshore do so in order to evade taxes. They choose low tax – or no tax – havens. I used to work for a trust company and have quite a bit of familiarity with offshore trusts and subs.

By: BTom

BTom — Wed, 06 May 2009 22:45:46 +0000

Solution? Drop the corporate tax rate even more. Corporations don’t pay taxes! The people that buy their products do! You want industry and jobs, cut corporate taxes, more hires, more people will start businesses and hire. And get rid of income taxes on individuals – it’s unconstitutional, our founders knew what income taxes did to societies, let’s give them a little credit. Facts are we would all be back to work and making more without it, and government could shrink enough and you and I wouldn’t notice a thing if the right areas were cut.

I doubt that 2% corporate tax has any credibility. That’s 2% US tax. Most other countries have their own taxes, especially if BoA is operating there.

Get ready for more job losses.

By: Taxrascal

Taxrascal — Wed, 06 May 2009 21:39:18 +0000

In 2004, US multinational companies reportedly earned about $700 billion (with a b). They paid tax of $16 billion on those earnings. That works out to a 2.29% tax rate.

…

The very companies that you and I are bailing out. Banks like Bank of America and Citicorp have each created more than 100 non-US tax-paying, off-shore subsidiaries (Citicorp has more than 400).

The number of subsidiaries doesn’t necessarily correlate with the amount of taxes avoided. I suspect that the smaller number of subsidiaries used by technology companies overseas lead to much higher earnings, and thus much larger amounts of taxes avoided.

But it still seems kind of odd that we would tax money earned abroad that’s mostly sent — and spent — in the US. If that money comes back to us as dividends, it’s going to be taxed at 15%. The US government is basically getting a 15% royalty on wealth produced outside the US, just because the wealth producers started here! Trying to collect even more seems greedy and counterproductive.

By: JBruce

JBruce — Wed, 06 May 2009 16:35:34 +0000

This legislation isn’t going to be a cure-all for anything — except to “catch” corporations that use existing tax laws to greatly reduce, or even eliminate, their US income tax obligations. By “leveling” a particular playing field, it will “repatriate” some tax revenues and may well lead to corporate rethinking about outsourcing jobs overseas.

Certainly it is annoying to discover that many of the firms that we’re “bailing out” are using these same laws to “evade” taxes. Perhaps one side benefit of all the TARP and other bailouts is that it focuses media attention on these companies and exposes to the general public some of their inner workings that heretofore nobody paid much attention to. Bonuses are another example. Maybe someone will note that many of these outfits still are paying dividends to their stockholders; I personally think that a condition of the bailout should have been to reduce dividende to a penny a year (there are technical reasons why it shouldn’t be zero). The stockholders’ money should be used to repair the business and not to drive it further in the hole.

To get back to the subject at hand, I approve of this legislation, although there should be something in there to protect those (if any) who have “legitimate” reasons to get the tax break. Don’t throw the baby (if there is one) out with the bathwater.