Here is what a high corporate income tax rate causes

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    doomer's Avatar
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    Here is what a high corporate income tax rate causes

    10 companies with the most untaxed foreign income
    According to U.S. tax law, any profits earned overseas must be taxed by 35% when returned to the U.S. That's why many companies park their cash on international soil - cash that could be shared with investors. Accounting expert Jack Ciesielski crunched the numbers on the biggest overseas balances.

    This was a Fortune money article today. I know this to be an issue. Eg. China's corporate income tax rate is 15%...where are you going to move your profits? Higher taxes aren't the issue...it is getting the income taxed in the US. Even at a lower rate, there is more to gain.
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    Quote Originally Posted by doomer View Post
    10 companies with the most untaxed foreign income
    According to U.S. tax law, any profits earned overseas must be taxed by 35% when returned to the U.S. That's why many companies park their cash on international soil - cash that could be shared with investors. Accounting expert Jack Ciesielski crunched the numbers on the biggest overseas balances.

    This was a Fortune money article today. I know this to be an issue. Eg. China's corporate income tax rate is 15%...where are you going to move your profits? Higher taxes aren't the issue...it is getting the income taxed in the US. Even at a lower rate, there is more to gain.
    This was on 60 Minutes last week or the week before. The CEO of Cisco allowed himself to be interviewed and was honest and straight forward with his company's dealings with the IRS.

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    The challenge is in believing that lowering the tax rate will create jobs in America. They tried this a few years ago by offering a 5% tax for money brought back as long as the companies agreed in writing to use it to create jobs. Some companies then eliminated jobs and there is no support to show that jobs were created by companies that got this deal.

    It's naive to think that companies are going to do right by Americans. They're going to do right by stockholders first and foremost and I say that as a dividend-receiving stockholder. Stockholders drive most business decisions.

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    Quote Originally Posted by Clyde View Post
    It's naive to think that companies are going to do right by Americans. They're going to do right by stockholders first and foremost and I say that as a dividend-receiving stockholder. Stockholders drive most business decisions.
    Agreed.

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    Quote Originally Posted by Clyde View Post
    The challenge is in believing that lowering the tax rate will create jobs in America. They tried this a few years ago by offering a 5% tax for money brought back as long as the companies agreed in writing to use it to create jobs. Some companies then eliminated jobs and there is no support to show that jobs were created by companies that got this deal.

    It's naive to think that companies are going to do right by Americans. They're going to do right by stockholders first and foremost and I say that as a dividend-receiving stockholder. Stockholders drive most business decisions.
    I wouldn't disagree with you. However, it would increase tax revenues or at least reduce the incentive to capture profits elsewhere. I believe the US has gotten too soft on international trade regulations. Of course, the consumer benefits from this, but only when we have jobs to buy things. We are losing manufacturing jobs because they move to low cost countries. Then the bigs invest in the LCC creating more jobs....there.

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    Quote Originally Posted by doomer View Post
    I wouldn't disagree with you. However, it would increase tax revenues or at least reduce the incentive to capture profits elsewhere. I believe the US has gotten too soft on international trade regulations. Of course, the consumer benefits from this, but only when we have jobs to buy things. We are losing manufacturing jobs because they move to low cost countries. Then the bigs invest in the LCC creating more jobs....there.
    In other words, 15% is better than nothing.

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    Mathmatically, of course, however, it doesn't have to be 15%, but the marginal rate near 40% is prohibitive. Add on to that payroll taxes and health insurance costs, why invest in the US (and other HCC) other than if there is a logistical advantage for those products that require quick delivery to market. And..with a manufacturing cost often much lower, companies can affort to keep more stock on hand for those products. The transportation time from other parts of the world has gone down drammatically in the past decade.

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