Raise taxes on foreign income, ship more jobs overseas
President Obama says he wants to stop giving “tax breaks” that encourage American companies to “ship jobs overseas.” Like a lot of protectionist rhetoric, it has a nice ring to it but doesn’t stand up to even basic scrutiny.
Obama refers to a tax-code provision that allows U.S. companies to defer the payment of some corporate income tax until their overseas profits are repatriated here. Most other industrialized countries don’t tax their firms’ overseas profits at all — perhaps because they’re too busy cutting tax rates to improve their competitiveness, or perhaps because they realize it’s actually counter-productive.
But rather than talk about why the president’s approach is wrong in theory, consider this example from today’s Wall Street Journal of a similar move Washington has already tried, and watched backfire:
Mr. Obama believes that by increasing the U.S. tax on overseas profits, some companies may be less likely to invest abroad in the first place. In some cases that will be true. But the more frequent result will be that U.S. companies lose business to foreign rivals, U.S. firms are bought by tax-advantaged foreign companies, and some U.S. multinational firms move their headquarters overseas. They can move to Ireland (where the corporate tax rate is 12.5%) or Germany or Taiwan, or dozens of countries with less hostile tax climates.
We know this will happen because we’ve seen it before. The 1986 tax reform abolished deferral of foreign shipping income earned by U.S. controlled firms. No other country taxed foreign shipping income. Did this lead to more business for U.S. shippers? Precisely the opposite.
According to a 2007 study in Tax Notes by former Joint Committee on Taxation director Ken Kies, “Over the 1985-2004 period, the U.S.-flag fleet declined from 737 to 412 vessels, causing U.S.-flag shipping capacity, measured in deadweight tonnage, to drop by more than 50%.”
Mr. Kies explains that “much of the decline was attributable to the acquisition of U.S.-based shipping companies by foreign competitors not subject to tax on their shipping income.” Mr. Kies concludes that the experiment was “a real disaster for U.S. shipping” and that the debate over whether U.S. companies can compete in a global market facing much higher tax rates than their competitors was answered “with a vengeance.”
Now the White House wants to repeat this experience with all U.S. companies. Two industries that would be most harmed would be financial services and technology, and their emphasis on human capital makes them especially able to pack up and move their operations abroad. CEO Steve Ballmer has warned that if the President’s plan is enacted, Microsoft would move facilities and jobs out of the U.S.
Some of our politicians can keep trying to deny the globally competitive nature of business today, but it won’t do us any good.
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191 comments Add your comment
Don't Forget
September 28th, 2010
1:41 pm
JackLeg
September 28th, 2010
1:05 pm
Don’t Forget;
Is there any logic to your reasoning? I am not the one saying how all the other countries are better than America, you are.
No jackleg. Where did I say that those countries were better than America?????? I said that their policy on foreign income was better than ours and I backed it up with the fact that Germany actually exports more than the US despite the fact that they have less than a third of the population of the US.
Linda
September 28th, 2010
1:48 pm
The last incandescent light bulb in America was made Fri. night. They will be illegal in 2012, thanks to the dimwits in DC, who are sending all these bulb jobs overseas. Bulbs containing mercury will be in our schools, hospitals, places of employment & homes within 2 years.
Don't Forget
September 28th, 2010
1:52 pm
Ragnar, have you been drinking?
If you only tax income on goods produced in country a, you produce an incentive to move production to country b.
JB17
September 28th, 2010
2:08 pm
A former union goon head of the SEIU is now under investigation for corruption including embezzlement. Typical Democrat goon. We’ll see if CNN reports it like Fox News is currently.
And speaking of Fox News, Obummer is running around whining about it yet again. This time he’s calling Fox News detrimental to the United States. Has anyone ever seen a SITTING president b!tch about a media outlet like this before? I sure don’t recall Bush whining about DNCNN, PMSBNC, The New York Slimes, The Washington ComPost, and all the other left wing liberal media outlets.
How pathetic. All the way around.
No More Progressives!
September 28th, 2010
2:17 pm
stew mcgravy
September 28th, 2010
3:50 am
Keep singing the same old “Obama is the problem” song, right wing douchebags… Keep nuzzling that corporate c0ck… maybe something will trickle down for you.
Somebody needs to contact the Daily KOS & let them know their moron got loose……….again.
Linda
September 28th, 2010
2:59 pm
The US Senate Committee on the Environment & Public Works will release a report later today that claims the EPA’s regulations on greenhouse gases is another Obama job-killing plan. It will cause the loss of 798,250 jobs in boiler plants. It will cause 18 plants to shut down that make 28 tons of cement, sending 9000 jobs to China.
MIT & others say CO2 regulation will cost $300 to $400 B per year. Good-bye, economy.
CO2 regulation will not reduce CO2.
AmVet
September 28th, 2010
3:52 pm
I don’t blame the banks…
Of course not. Not when you Uncle Sam haters can blame anybody and everybody but them.
HDB, there is no way in hell the unread and uninformed cons have the moral courage to gonna stand up against the corporate destruction of capitalism. They fought long and hard – for thirty years or more – to implement the American plutocracy. All because their elected “leaders” told thme that this was how capitalism was supposed to look.
The statistics are shocking. The numbers don’t lie and the faithful remain clueless to both what has happened and why.
So they parrot the party-line with nonsense about “letting the free market police itself”, even though there has been a massive corporate crime wave stampeding through this country for many years. That the faithful won’t even acknowledge!
And now that the oligarchy is near fruition, they still have no clue as to the damage that has been unleashed on working American families. Who they actually fault, rather than the banksters, casino capitalists and legalized thieves, as the source of their own economic suffering.
As long as today’s criminals are white collared, these corporate wh*res in the Anti-Law & Order Party are hunky dory with them all. Even though as I just noted, they just royally screwed millions of American families as they danced merrily along to their “sustained orgy of excess and reckless behavior” as noted by Dallas Federal Reserve Bank President Richard Fisher.
No wonder we as a nation are so screwed…
Ragnar Danneskjöld
September 28th, 2010
4:06 pm
Dear forget @ 1:52, you err. “Imposition of taxes” undoubtedly unleashes an economic desire to diversify income sources toward those untaxed areas, but that is as far as we agree. Your argument, however, is outside the topic, as we were not discussing creating new markets; the argument is the effect on comparable but differently-taxed markets. The most rational argument you could suggest would be that all markets should be taxed equally by a taxing authority, to prevent inadvertent unanticipated consequences of the tax. Otherwise you are wrong about the consequences of a “foreign earnings” tax.
Ragnar Danneskjöld
September 28th, 2010
4:10 pm
dear forget @ 1:52, if you really want to protect jobs, the smarter course may be to greatly reduce the taxes on purely domestic income – not only does that encourage businesses to produce at home, but the absence of tax would create an international “jobs advantage” in that all producers would wish to conduct as much of their business as possible in the tax haven.
Not So Casual Observer
September 28th, 2010
4:30 pm
Amvet,
Interesting you would cite the President of the Dallas Federal Reserve Bank.
The Federal Reserve, created in the same time frame as the income tax, is at the very heart of the problems in the US. The Founding Fathers warned of the dangers of a central bank and predicted the outcome over 200 years ago. Leaving the Gold Standard exacerbated the plunge.
In 1946 there was approximately $150 Billion in circulation and in 1971 after leaving the Gold Standard, there was $6 Trillion in circulation. The Founding Fathers spoke often of the danger of releasing the printing of currency to a central private bank.
According to Amvet:
“So they parrot the party-line with nonsense about “letting the free market police itself”, even though there has been a massive corporate crime wave stampeding through this country for many years. That the faithful won’t even acknowledge!”
The crime wave started to roll at Jekyll Island Georgia with the creation of the Federal Reserve in 1913. The founders even made a part of the legislation a stipulation that the Federal Reserve Banks would keep all profits and the American taxpayer would cover any losses.
The owners of the Fed and the politicians, both R’s and D’s, are neck deep in the mess and all of them should be lined up and executed for crimes against the US. I find most interesting that corporate execs have been brought before the courts for their “crimes” but all of the Liberal buds, like admitted crook Franklin Raines, continue to function in the Obama administration as if there were never a problem.
Stand up and admit AMVET, as you admonish others, that the Liberals in the Democrat Party are no less guilty of crimes than those you love to pillory!
Government Corruption
September 28th, 2010
4:32 pm
If ONLY they remove ALL of those OUTSOURCING RepubliCON LOOPHOLES and quit subsidizing those companies to send American jobs overseas and demand that other countries allow UNIONS to organize with workers and build safer conditions & a share of the profits by the workers, REMOVE subsidies from companies that claim to be American, but HQ in other countries, ex: DUBAI like Halliburton/ Brown & Root.
But wait, WHAT is really hurting America is that even RepubliCONs DON’T believe in Reaganomics, “trickle down…” as the average hourly wage earners wages have not seen a substantial if any sort of increase in their wages, BUT CEO’s and TOP Executives receive $$ MILLIONS $$ in salaries, bonuses, and PERKS and get “Golden Parachutes” when they bankrupt the companies. And that is WHY America can not be competitive, we spend more on UN-EARNED BLOWN UP Salaries and corporate SCAMS that are O.k!
OF course the RepubliCONs don’t want to hear about blaming BUSH & the RepubliCON run congress that put America in this mess to begin with in 2001-2008 or today in 2010 and that is the problem, RepubliCONs think they have some kind of CREDIBILITY on how to run a country, HUM! REALLY?
Define INCOMPETENCE & IGNORANCE. 10 years of RepubliCON TYRANNY and INCOMPETENCE has HUMILIATED America across the seas, BARBARIANS and America’s worst terrorist organization in the history of America 234 years of white supremacists that have kil&*led more American’s of color or other religious faith.— RepubliCONs—GOP—Party of 1950’s HATE/FEAR/ & WAR-MONGERING.
Nearly 30 years behind the rest of the developed world in Alternative Energy sources, instead under RepubliCONs we in America are STILL dependent on fossil fuel as a primary source of energy, even when America developed the solar panels, RepubliCONs OUTSOURCED and COMMUNIST CHINA is the largest manufacturer in the world then Europe-that “Socialist” country RepubliCONs like to demonize, as they demonize everything else except their own incompetence.
History of RepubliCONs-EXPLOIT MAN-KIND, FOR A PROFIT for the ELITE!
HDB
September 28th, 2010
4:34 pm
CAIR Bears
September 28th, 2010
12:36 pm
“Thanks for clarifying my point, HDB. You see everything in black and white.”
I can see a lot more than you through my prism; I can relate to a Latino being screwed by SB 1070 better than you…I can relate to an Asian working towards his/her degree better than you; I can relate to Native Americans being flooded out of their homes on the Red River better than you…….
You’re only focused on your existence…….
@ JB 17: “Has anyone ever seen a SITTING president b!tch about a media outlet like this before?”
Yep….listen to Richard Nixon talk about the Washington Post, Woodward and Bernstein…..Obama is TAME in comparison!!
JackLeg September 28th, 2010
1:05 pm
” don’t blame the banks; I blame the idiots who took out mortgages knowing they would default.”
Not in every case….many took out loans that they COULD afford….but the economic downturn during the Bush Years changed the entire paradigm! I know of 25,000 people who were LAID OFF immediately after 9/11….and they have YET to recover!! Are they to blame?? Those who SPECULATED on real estate were the ones whom you should be railing against!!
“If a person does a budget they would know what they can afford. If you listened to the banks or someone else to make a decision for you; your and idiot.” If the banks give you a “sweetheart deal” to entice your business….then screw you when the hard times hit…then the banks DO deserve a part of the blame!!
“I bet you are a smoker, that is because they sell cigarettes so you must smoke them, right HDB?” Nope — don’t smoke!!
Not So Casual Observer
September 28th, 2010
4:39 pm
Linda @ 1:48p,
Have you seen the youtube of the Congressman reading the bill on the House floor? Hillarious if not so depressingly dangerous for the public.
Not So Casual Observer
September 28th, 2010
4:42 pm
HDB,
Please tell us where SB1070 is at variance with existing federal law. I can help you, there is nothing in the bill that is not already codified in the Federal statutes. Keep sucking up that Liberal Lemonade with all the sugary content to turn your brain to mush.
HDB
September 28th, 2010
4:48 pm
Not So Casual Observer
September 28th, 2010
4:42 pm
We all know that SB 1070 is a TARGETED law…specifically aimed at Hispanics! Would the concern be as great if the illegals were Caucasian and came across the Canadian border?? Think NOT!! Laws are supposed to be race and gender NEUTRAL!! Are we aiming to create a police state….and reauthorize segregation??
THAT’S the point!! (…and I use Splenda instead of sugar!)
Not So Casual Observer
September 28th, 2010
4:54 pm
HDB regales us with this plum:
“Not in every case….many took out loans that they COULD afford….but the economic downturn during the Bush Years changed the entire paradigm! I know of 25,000 people who were LAID OFF immediately after 9/11….and they have YET to recover!! Are they to blame?? Those who SPECULATED on real estate were the ones whom you should be railing against!!”
1. “economic downturn during the Bush Years” – Do you mean Bush is responsible for the economy after 9/11/01?
2. “I know of 25,000 people who were LAID OFF immediately after 9/11″ – could you name them all please? How bogus can you be HDB?
3. “I can relate to Native Americans being flooded out of their homes on the Red River better than you” – so being the victim of a flood is racial?
How about the floods in the midwest and the lack of response by the Obama administration? Did you hear or see them on the news crying about how they were abandoned and the federal government is at fault? Uh no, you did not – but in New Orleans the problems were the government’s fault and in NO the residents DEMANDED to be compensated and the loyal Democrat pols in LA sent $250,000,000+. I guess you relate to the criers and whiners (like Obama).
HDB, like all Libs and Dems, loves to be the VICTIM!
Not So Casual Observer
September 28th, 2010
5:02 pm
HDB @ 4:48,
Just answer the question. Rhetoric and your MSNBC talking points will not suffice.
The law is aimed at illegal immigrants, those who are accumulating in our prisons, destroying our schools, overwhelming our health care facilities and committing crimes at a rate several times their part of the population.
By the way I will wager the State of Arizona ultimately prevails. The not-so-capable Attorney General apparently has never read the US Constitution regarding jurisdiction over disputes between the states and the federal government, or more likely he was just “shopping jurisdiction” for a court to give him a temporary victory.
Once more, HDB (can you read?), give me an example of SB1070 being contrary to existing federal law.
CAIR Bears
September 28th, 2010
5:04 pm
“I can see a lot more than you through my prism; I can relate to a Latino being screwed by SB 1070 better than you…I can relate to an Asian working towards his/her degree better than you; I can relate to Native Americans being flooded out of their homes on the Red River better than you…….
You’re only focused on your existence…….”
HDB = total racist and a loser.
CAIR Bears
September 28th, 2010
5:05 pm
“Are we aiming to create a police state….and reauthorize segregation??”
Affirmative Action is segregation.
CAIR Bears
September 28th, 2010
5:07 pm
“I can relate to an Asian working towards his/her degree better than you”
Ah, nothing like a race baiting clown.
HDB, not only do you NOT know anything about me, you also suffer from what I call “black man delusion” where all you do is point fingers at white people all while showing off your utter hypocrisy.
Like I tell all racists, go sell stupid somewhere else.
md
September 28th, 2010
5:09 pm
“We all know that SB 1070 is a TARGETED law…”
Yes, it is targeted – at illegals. Kind of hard to not think it is race related when hispanics comprise over 60% of the targeted. I’m sure if 60% happened to be purple, then some would say it is targeting purple people.
Duh…….
CAIR Bears
September 28th, 2010
5:09 pm
“Would the concern be as great if the illegals were Caucasian and came across the Canadian border?”
Yes race baiter, they would. If Canadians were crossing the border, killing people, not paying taxes and taking jobs away from people yes, we would be just as upset.
Oh by the way, the former Mexican president said Hispanics do the jobs that lazy black people won’t do. That should make you want to seal up the border quick.
CAIR Bears
September 28th, 2010
5:10 pm
md
HDB is our resident race baiting lunatic.
CAIR Bears
September 28th, 2010
5:11 pm
“I can relate to Native Americans being flooded out of their homes on the Red River better than you…….”
Uh, moron, I have Cherokee Indian blood in me. Try again, Farrakhan.
AmVet
September 28th, 2010
5:20 pm
Not so, I note that you fault the organization but not the message, which is accurate. As evidenced by your avoiding it like the plague.
Do you disagree with his assessment? Or do you just look for ways to discredit his employer citing irrelevant mush that goes back 100 years ago?
Do you not agree that there has been a massive corporate crime wave in this country that culminated in the meltdown of 2008?
I’d be shocked if you had the temerity or integrity to even admit that much.
Because in your worldview, the entire reason for America’s financial paroxysms is ‘liberals”. As evidence by childish nonsense such as this: “The only true regulation the government needs is to keep liberals away from the federal coffers and out of the taxpayers pockets.”
Or this sophomoric statement: “an indication of the Obama Administration’s contempt for private business in the eyes of Liberals then there is no hope for free enterprise and Democrats to coexist.”
It is exceedingly hard to take people who aver such inanity seriously. No matter how pedantic or pompous their writing style.
And spin and deflect as you will, but your nonsense concerning the events of 1913 is nothing but a major league red herring.
That you hold Wall Street and the multi-nationals completely blameless for their attempted corporate destruction of capitalism is interesting, but not useful.
But please do enjoy your parallel reality…
CAIR Bears
September 28th, 2010
5:30 pm
But please do enjoy your parallel reality…
AmVet is a frequent guest.
Linda
September 28th, 2010
6:03 pm
Not So @ 4:39, No, I didn’t. Is there a YouTube video? I’m buying all the old-style bulbs I can from every source I can, even if I have to store them under our bed.
Linda
September 28th, 2010
7:14 pm
This blog started Mon. @ noon & it’s Tues. @ 7 PM. Kyle should have started another blog long ago. To protest, we are going to do two things. Half of us will watch the replay of the Falcons game tonight on the NFL network @ 9:15 & the other half of us will swap recipes & recommend restaurants.
Democrats Propose Harmful Corporate Tax Increases «
September 28th, 2010
8:54 pm
[...] while taking even more money out of the American economy. Microsoft CEO Steve Ballmer has already declared that “if the President’s plan is enacted, Microsoft would move facilities and jobs out of the [...]
VOTE 4 NATHAN THE THIEF DEAL,CAUSE HE IS LIKE BUSH
September 28th, 2010
9:21 pm
KYLE YOU AND YOUR KLAN FOLLOWERS ARE SO SUPER STUPID,THAT IT AMAZE ME THAT YOU FOOLS DID’NT SAY A WORD WHEN BUSH AND THE GOP BROKE AMERICA,I WISH NATHAN NO DEAL WINS THE GOV OFFICE,SO THAT HE CAN FOOL YOU REDNECKS AGAIN LIKE SONNY PERDONT DID,REMEMBER THE CONFEDERATE FLAG? SONNY SOLD YALL OUT,SAME THING COMING WITH DEAL,SO DEAL WITH IT!
VOTE 4 NATHAN THE THIEF DEAL,CAUSE HE IS LIKE BUSH
September 28th, 2010
9:25 pm
I C RATBOY RAGNAR CAME OUT OF HIDING!
skydog
September 29th, 2010
7:55 am
Linda,
You said, Why don`t I just get insurance on the way to the emergency room?
Why don`t I just not get COBRA and let YOU pay for my health care at the emergency room if needed?
That IS the system that we have in place now.
Your response may be, “let um die on the curb”.
I know some of you do, but your party does not have the guts to take that stand being so Godly and all.
So, here we are.
We can keep what we have and pay for EVERYONE at emergency room prices or….?
Booger Biscuts and Gravy
September 29th, 2010
8:22 am
Doesnt matter…
Obama is a very stupid politician.
Obama is very naive.
Obama is not very suave.
Obama is killing the Democratic party!
Obama is a loser!
Obama WILL be a one-termer!
Its fun watching Obama sink his own ship with his brand of feces.
skydog
September 29th, 2010
8:30 am
You only lost by 10,000,000 votes last time Boog!
(7 zeros iz millions Boog.)
OK…back to the WWF
Booger Biscuts and Gravy
September 29th, 2010
8:47 am
True SDog. The beauty is the independents, swing voters and naive young voters gave the Dems/Obama a chance and have gotten screwed in the process.
Very VALUABLE history lesson especially for these wide eyed immature optimists who will be quite reluctant to vote Dem in the future. And this is a good thing.
CAIR Bears
September 29th, 2010
8:52 am
“KYLE YOU AND YOUR KLAN FOLLOWERS ARE SO SUPER STUPID,”
When the next terror attack hits, the gal who wrote that above all-caps nonsense is sure to be a prime suspect.
LeeH1
September 29th, 2010
9:28 am
“Let’s see: it costs $50.00 to have a UAW guy over here install a seat in an automobile; it costs $7.00 to have it installed by a non-union buy in Europe. I’m moving some business to Europe.”
That non-union guy in Europe can’t afford to buy your car. The union guy here in the US no longer has a job, and now he can’t afford to buy your car either. No one can buy your car. Now, how much have you saved?
Don’t screw other Americans by having their work sent overseas, to be sold back to other Americans. At some point, if everyone did this, no one in America would have a job. Oh! I forgot! we’re already there!
VOTE 4 NATHAN THE THIEF DEAL,CAUSE HE IS LIKE BUSH
September 29th, 2010
10:29 am
IM GLAD POTUS OBAMA HAS KEPT US SAFE IN AMERICA,UNLIKE BUSH WHEN THE TERRORIST STRUCK ON HIS WATCH!
skydog
September 29th, 2010
11:07 am
That`s not what I`m hearing from the youngsters around my house Booger.
They are laughing their little arses off at all the GodgaycolorgunOphobia on your side.
Run the Moose Lady. You will lose by 10,000,000 again.
Run Romney. Oh…that`s right, the evangelicals will never go for that.
Ya`ll are screwed, figurativly of course.
Steve Abramson, publisher, VAT-US.com
October 1st, 2010
11:17 am
Instead of looking to raise tax revenues by taxing overseas income, the United States should eliminate the Corporate Income Tax and replace it with a revenue-neutral Value Added Tax. This tax reform would do away with the incentive for multi-nationals to use transfer pricing to park profits in lower-taxed countries, bring American capital home, and make the U.S. the strongest magnet for foreign capital. At the same time it would impose a “flat tariff” on imports, and make exports more competitive, since the VAT is subtracted from exports. For reference info on VAT, go to VAT-US.com
No More Progressives!
October 2nd, 2010
7:47 pm
skydog
September 29th, 2010
11:07 am
Ya`ll are screwed, figurativly of course………..
You don’t read many polls, do you?
But then, you’re a mighty progressive, always the smartest person in the room.
See you next month.