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If the rates were significantly lowered, would it really bring businesses back here? And how much lower would they need to be to make us internationally competitive?
IMO, US Corporations are swimming in cash and do as little for the country as they can. Lowering the rate will just give them more cash to pile up and give out to executives.
Besides, look at Apple. Their tax dodge is now being challenged. Hopefully more countries will realize they are being ripped off by corporations (in so many ways - including such things as sports stadia's) and apply a bit of heat. That will make the "high" tax rates in the US seem not so bad.
Last edited by blktoptrvl; 10-21-2016 at 09:45 AM..
Trasnationals bring money (US Dollars) back into US from other countries which in Exchange decrease the worth of their currencies, that make US exporters to be less competitive to sell stuff to those countries,
Location: Was Midvalley Oregon; Now Eastside Seattle area
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^ Such is the nature of commerce.
The search for efficiency is never ending, regardless of source of origination or destination.
Last night I went shopping for gopher gasers. I used more in gas than the savings in product. But it is commerce. Guess where I bought? the answer is obvious-...
A corporation has to evaluate the costs of doing business in a location and the alternatives. In the past doing business outside the US was more difficult but today it can be effective and more profitable. The US is now competing with countries across the world. Moving a business in and out of the country can be very costly so going back and forth is less likely.
It may be that the way the US taxes overseas profits is a bigger deal. A US corporation that operates and earns profits in an other country must pay taxes in that country but the US government also want to tax those profits that were earned elsewhere and already taxed. This results in very large amounts of funds that are left and used elsewhere rather than brought back into the US.
All US entities are taxed on their global income. This is not the most common thing in the world, but it has long been the case here. US corporate tax rates are NOMINALLY among the highest in the developed world, but thanks to massive catalogs of tax preferences, effective tax rates are in many cases far less than nominal rates. There is nothing unpatriotic about either an individual or a corporation arranging its or his affairs so as to minimize tax burden. This has also long been the case here.
Meanwhile, a persuasive case that corporate tax cuts would provide an actual benefit to anyone but corporate executives and stockholders is not very much in evidence.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Corporate taxes are only one part of the higher cost of doing business here. There are many other costly regulations, including minimum wage, overtime and other DOL and EEOC regulations, insurance costs, property and equipment costs, risk management costs. One fish processor actually sends the fresh caught fish from Alaska to China for processing, and it comes back frozen and packaged. Even with the transportation costs with cold storage both ways it's still a lot less expensive than doing the work here.
I had a business (small manufacturer) for 16 years. In 2005 I was approached by a company in China that offered to do the work there. I would send the CAD files, and they would make the items, and ship them to me, total cost less than what I was paying here just for materials. My labor at the time was $12/hour, with 3 people that added up. I passed, but it became harder to compete and when the recession came it was all over.
A corporation has to evaluate the costs of doing business in a location and the alternatives. In the past doing business outside the US was more difficult but today it can be effective and more profitable. The US is now competing with countries across the world. Moving a business in and out of the country can be very costly so going back and forth is less likely.
It may be that the way the US taxes overseas profits is a bigger deal. A US corporation that operates and earns profits in an other country must pay taxes in that countrybut the US government also want to tax those profits that were earned elsewhere and already taxed. This results in very large amounts of funds that are left and used elsewhere rather than brought back into the US.
The part in red is completely false. Corporations (and individual taxpayers) who pay taxes to foreign countries receive that as a credit on their US tax returns.
The issue is that US companies want to bring the foreign earned income back inside the US "un-taxed"
Sometimes this is called "repatriation" which I doubt 95% of the population even knows the meaning of that word when used in this context.
US companies are always able to bring the earned income back into the US provided they pay the statutory corp tax rate of 35%.
There is also a big difference between "statutory rates" vs "effective rates" which I'm not going to get into.
Collectively, US Corporations pay about $450 Billion or so in Federal Income Taxes.
Unfortunately, because The Code is so complex, those same corporations pay another $325-$350 Billion in compliance costs. Compliance costs include the salaries of the tax accountants, tax attorneys, outside consultants and the like -- just to prepare the damn paperwork.
General Electric employs about 1400 Tax Attorneys and Tax Accountants full-time - just to plan and prepare the corporate Federal Income Tax Return, which measures over 24,000 pages in length.
Intel Corporation employs about a third as many, but then again its business is much simpler. Intel measures its Federal Income Tax Return in Yards, Feet & Inches.
It isn't just about saving some of that $450 Billion in Federal Income Taxes paid to the IRS. It is ALSO about saving some of that $325 Billion to $350 Billion paid to quite literally millions of tax accountants, tax attorneys, and tax consultants, almost all of which is deadweight loss.
****
A far better system would be to completely eliminate Federal Income Taxes. Just zero them out completely. In the real world, the Treasury needs that $450 Billion in Federal Income Tax revenue (or more), so we have to raise taxes elsewhere. Let's raise personal federal income taxes to make up the difference. Let's make them very progressive, so those with the highest incomes pay much, much more.
The IRS would raise just as much money (if not more) through highly progressive personal income tax rates. Corporations could invest like crazy. That "sucking sound" you would hear is the sound of multinational corporations relocating some operations to the USA.
Everyone would be at least as well off as they are now, and most would be better off.
Except for corporate tax accountants and corporate tax attorneys. Heck, even the IRS could get rid of many of its people who just focus on the corporate side of tax filings.
Collectively, US Corporations pay about $450 Billion or so in Federal Income Taxes. Unfortunately, because The Code is so complex, those same corporations pay another $325-$350 Billion in compliance costs....
A far better system would be to completely eliminate Federal Income Taxes.
I agree.
Simplify and remove sand from the gears.
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