There has been debate about taxes lately which has consisted of the normal "they should go up" or "they should go down", but there has been an underlying debate about Romney's new tax policy. The idea would be based on territorial taxes which would mean multinational corporations would not be taxed on income not made in the US. Up until this time they were taxed but could defer for years and sometimes indefinitely. What do you hubbers think? Should this be the US next step?
Yes, it should.
It's another area where the US has fallen behind, and discourages businesses from investing in the US, and discourages new investments in the US.
Right now, the worldwide tax system serves as a disincentive for multinational companies to use foreign profits as investments in the US. So what do they do? They re-invest that money in those other countries, over and over again. We don't get any tax revenue from it, but worse, our economy doesn't see any of that cash flow. We would have more GDP, more wealth, and more jobs, if that money was reinvested here.
It's estimated that there are between $1 and $2 trillion dollars of overseas profits that could come home if they weren't taxed. That's 7-13% of our GDP, it would be a huge boost especially at a time where we have double-digit unemployment.
If you live and operate any business from of in this country you should pay taxes based on the income. How could it be any other way. If you live under the protection of our laws and military and use the resources provided by this country then you should pay for those priveleges.
Here's the thing rhamson
Let's say you have a business, selling a product. You do very well, and you expand, open stores overseas. You do well there too, which is great!
Now, you can do one of two things with the money you make overseas. You can re-invest it in the American economy, but you have to pay somewhere between 10-30% tax on that money to bring it over here, or you can reinvest it in another country, for no penalty.
It's insane to think we should be taxing businesses that operate in other countries. The rest of the world has figured this one out, we're just slow to follow.
So not only do we have the highest corporate tax rates, we also punish multinational companies that might want to invest in America on top of that.
Here's the other thing. You live and breathe and work in this country which gives you the security, protection and safety you would not get to your satisfaction overseas. So should you be able to operate under this blanket while partaking all its' freedoms yet deny the very security you operate under any support? There are inalienable rights we accept as the normal way of living our lives. How is the military to be supported or the court system afforded if we with hold the money that provides them the ability to operate? Are we not still citizens of this country who do business overseas? How can we separate the two and expect the other to flourish? You can give up your citizenship and move to Vietnam or Thailand or Hong Kong and avoid all the taxes you want but can you be assured your rights and freedoms are protected while living in your new homeland over there?
Hey, let's get things straight here.
Citizens pay personal taxes on their income. US business owners pay personal taxes on their own personal income. Debt is paid.
Corporations that operate in the US pay taxes on their income. Debt is paid.
But, if you expand your business to another country, here is what happens. You have $500,000 in profits from your business in Canada. If you reinvest that money in Canada, you won't pay US taxes on it.
But, if you want to bring it to the US, you have to first pay 20%+ taxes on it, just to move it over here.
Again, all this tax system does is say 'Don't bring your money into the US'.
Or expand your business here and support American workers.
Taxes are based on your income not on where you happen to make it. That is why the overseas labor market and corporate profits are at an all time high because they do it at the expense of killing American jobs and tax structures. Someone has to pick up the tab to allow us to continue at our standard of living and not the foreign countries standard of living. The problem is nobody wants to make up that deficeit.
What about multinational companies?
If a business is located in several countries, shouldn't it pay taxes based on where it is operating?
Or are you proposing it should only pay taxes based on where the 'owner' lives?
Who is benefiting from their location? It is simpler to move to the country you wish to gain the greatest profit but can you put up with the politics of that country and not live in fear of a regime change to wipe you out? Besides where can you buy the politics of a country better than here and be assured the rest of the scumbag ploiticians will cover your inside mans back? A good business move is to be here and pay a politician to keep your interests overseas at bay from the IRS.
Rhamson, I'm talking about multinational companies. Companies that do business in Japan, England, France, Germany, the US, and other countries.
Many of these countries don't have a 'home' country.
Why would you expect them to have to pay more US tax on what they make internationally?
I don't know how to explain it more clearly that unfortunately we have been conjoined in a world economy that has all the trappings and missfortunes that come with it.We cannot separate ourselves from the banks in England no more than we can from the union demands here in America. The responsibility of supporting ones own country to retain the life style that comes with it unfortunately has a price. Because of our expenditures overseas with regards to defense spending, humanitarian work and bi-lateral trade agreements opens up more and more responsibility to support it as corporations seek more crafty ways around it.
Just because you cross a border with your loot doesn't make the act more separate than if you took a big breath in one room and walked into another room thats a vacuum and expecting that breath to be adequate enough to last you. Eventually you will need to go back to the other room for another breath. One doesn't make a distinction between the other. You do.
Then why don't you clarify your position? I've asked several clarifying questions, which you haven't answered.
Should ALL corporations that have any operations in the US pay US taxes on all their profits worldwide?
I thought you got the message. YES, YES and YES. How could the country support all it's worldwide commitments otherwise? Who drew up the trade agreements and enforces them? Who goes and protects their oil fields and other interests overseas? Who rescues their personell when bad things occur? Who guards their property and registers their patents? Good old Uncle Sam. I guess this should be a free service because the corporation operating outside the US should take the lumps and who cares if it has worldwide ramifications? As poorly run and executed as it is there is a presence that corporate America wants but seems unwilling to pay for.
Ok... how can you defend that position?
A business in Germany, you want to tell them that if they open A SINGLE STORE in America, that ALL of their income they make in Germany is subject to US tax?
What kind of ridiculous idea is that? You would discourage international corporations from ever working in the US...
The rest of the world understands that it is a bad idea. NO COUNTRY does that kind of thing.
And you should remember that the wealthiest individuals in this country pay FAR more into taxes, both as a dollar amount, and as a percentage, than the vast majority of Americans.
So don't make the claim that someone who pays $1 million in taxes into defense, education, and every other government program isn't paying their 'fair share', compared to 50% of Americans who pay nothing(many of them take out of it), and another 40% of Americans who pay relatively little.
Wht if they were living in Syria or Libya. How would their operations look? With the biggest military in the world to cover their buts such as America has it must coe=st somebody. Does it mean that they should get anymore protection that anybody else? Surely not but it all comes with a price tag and percentage wise it falls on all of us.
Notice the attention that threads like this get, compared to threads about gaffes, tax returns, birth certificates, etc...
It's probably fairly representative of the average citizen, and why politicians and the media don't focus on the real issues as much as they should.
I definitely think there should be a revamp of the tax system for American companies, but the problem with territorial systems is that it would only push companies to foreign lands faster than what's taking place now. That's unless we can create a hybrid with some incentives to return here. Lower corporate taxes might help a bit, but even more
Important would be higher tax deductions for companies choosing to return. And I agree with your second statement. I was actually thinking the same thing. Everyone likes the entertaining aspects of politics but when it comes to time to get down to business people tend to "worry" about other things.
It wouldn't push them overseas anymore than it does now, and if we lowered the tax rate, there would be less reason for them to go overseas in general.
You have to understand that outsourcing and 'overseas operations' aren't necessarily a bad thing. A company can outsource some of their operations to be more efficient in what they do domestically. If their time and space domestically is better spent doing something else, then the net result is more jobs, and more economic stimulus by being able to outsource.
So the territorial system would allow companies to outsource things that should be outsourced(comparative advantage), but still use those profits here in the US.
Certainly that's the case in a perfect system, but this doesn't necessarily happen. When companies were given a tax holiday there wasnt any sign of investment here in the US. Territorial tax systems are a permanent foreign tax holiday for these companies. What would change?
Is this the same concept that reducing taxes will cause people to invest?
The same one that was proven to be an absolute failure on an individual level?
It isn't taxes that are driving companies overseas. It's the higher wages and standards of production in the United States.
Besides, don't most corporations just create smoke and mirrors to avoid paying taxes anyway?
1 - Lower individual tax rates hasn't proven a failure. That's a separate topic we could discuss.
2 - No, most corporations don't avoid paying taxes. The media likes to claim they do(like how NYTimes said GE got a refund... they didn't).
This is specifically saying to multinational companies 'Don't you dare bring your profits you make in that other country over here'.
I think that removing any taxes would just cause other taxed things to rise. The country has the same costs, but when there is less income (taxes) they must raise the price (tax rate) to accomodate the costs.
I don't have a good answer for this. I don't think adding taxes to more things would be bad, my state recently started taxing things like candy and soda, which probably helped the state out in some way. I think if you bring something into the country (money) you should pay a duty (taxes). If I buy a pair of shoes in Canada, I need to pay a duty to bring it over the border.
Let's say you are a French citizen. You start a clothing line, and it is very successful.
You expand your business to America, and pay American taxes on those operations.
Then you say 'I want to take $1million that I made in France to expand in America.
The government says 'Sure, but we have to tax that money first'.
So you say 'Meh, I'll invest it in England instead.'
Can you understand the problem?
But the biggest comsumption based economy is the US and that doesn't stop anybody at all. Look at the corporate Chinese takeovers that are going viral. It has not slowed any foreign interests a bit. If they wish to make a capital investment then I am sure they will avail themselves of every write off their bean counters can absorb. But what about the taxes on the gains. Is that hands off because they balk at the taxable profits they have otherwise gained had they not invested in our economy?
Why don't you address the point?
You keep going off tangent. Do you think it is a good idea that we tell that French citizen that he can only invest more of his profits in America if he pays extra taxes on them?
Or, should we say 'You want to invest here? Sure! Come on over!', and then tax him on the money he makes from investing in America?
Here is how ridiculous that idea is.
A company in Canada makes $100 million a year in profit.
For them to open up business in the US, they would have to pay $20 million a year extra in taxes.
Now, a good profit margin is 5%. So to make $20 million in profit back in the US(what they need to break even), they would have to have $400 million in sales. $400 million in sales and they would break even. That's a LOT of work, just to break even.
Can you see how maybe that isn't a good idea?
I think this is another "agree to disagree" things that we won't see eye to eye on....
If corporate tax works anything like expatriate taxes, there should be credits that companies can take to offset taxes already paid in other countries. Regardless, there are plenty of credits and deductions that companies can take to offset a large portion of their tax obligation.
As for the "GE didn't actually get a refund." That may be technically true, but if we are using the argument that they do pay taxes, then we also have to throw out the myth that 47 percent of Americans don't pay taxes. Everybody pays some tax.
Overall, I don't think tax rates necessarily discourage companies from investing here. You have to look at the whole picture. Paying higher wages and benefits to be competitive in the US job market is much harder than in China where there are no safety regulations. We could cut the tax rate to zero and businesses would still be loathe to invest here simply because it costs more to pay workers.
Corporations do get an offset, but they can still pay over 20% extra in taxes on top of what they already paid in foreign taxes. The crazy thing is, we tell them 'If you invest that money in that other country over there, we won't tax you at all. But, if you invest that money over here, gosh darn it we're just going to take 20% off the top. Do you really think that makes sense, when you are trying to encourage people to stay in the US?
No, it's not the only deciding factor, but this is a big one. If you had a business that was doing well in the US and in Canada, think about the ramifications of having $100k to reinvest. You could reinvest $100k in Canada, or pay the US government $20k to invest the other $80k in the US.
And no, we don't have to throw out the 'myth' that half of Americans don't pay tax. When we talk about taxes like this, it is federal income tax we are talking about. GE paid taxes, half of Americans pay none, or get a refund(up to a -50% tax rate, or more).
Everybody pays some form of tax. In fact, the only good argument against the "GE paid no tax" story is that they paid state, local and payroll taxes.
Hey, guess what?
So does everyone else.
No, GE paid federal taxes. The whole story about them not paying taxes, and/or getting a refund, was complete bull based off a single misunderstood figure from a non-tax document.
Again, when talking about federal income taxes, which is what a territorial tax system applies to, corporations pay more than the rest of the world. Wealthy individuals(even Romney) pay more than 98-99% of Americans, and half of Americans pay no taxes, or get a refund.
A refund is simply the government giving back money because you paid too much income tax throughout the year. It doesn't mean that you don't pay taxes.
Sorry, let me clarify.
The story was that GE had no tax liability, and got a refund on top of that. Negative tax rate. That wasn't true at all. GE had a positive tax rate.
When I say half of Americans paid no taxes or got a refund, I mean 0% tax rate, or negative(refund on top of no tax liability).
I believe the average tax rate of the bottom 50% of Americans in 2009, including refundable credits, was -8%.
You still have to consider Social Security and Medicare taxes. Those are federal taxes that are taken out your income.
Even with those taxes, the bottom 50% paid very little, nothing, or got a refund. This is irrelevant to whether or not GE paid federal income taxes. They did.
This is getting off point though. The point is the taxation of corporations for bringing in foreign profits.
What is the justification for saying 'You pay no taxes if you reinvest in another economy, but you have to pay more taxes to reinvest here'?
And my point is that corporations and individuals pay taxes in much the same way.
So if one thing is true for one group then the same is true for the other group.
What about us telling corporations they won't pay any extra taxes if they reinvest in other economies, but will be taxed to invest in America?
I don't want to keep going off topic, but you are still comparing different types of taxes. GE paid federal income taxes. Half of Americans don't.
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