Firms Move to Fight Overseas-Profit Tax (Tax Break For Outsourcing Jobs)

[OhioChick]

Source: Wall Street Journal

APRIL 6, 2009

WASHINGTON -- In one of the biggest battles between the business community and the White House, corporate lobbyists are intensifying efforts to block an Obama administration proposal to raise taxes on overseas profits. Executives say the measure, which could cost U.S.-based multinationals $100 billion over the next decade, would hamper economic recovery efforts.

In recent days, groups including the Business Roundtable, the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Foreign Trade Council have helped form a lobbying coalition called Protect America's Competitive Edge that is devoted specifically to the issue. A letter sent to Congress last month opposing the plan was signed by 200 trade associations and companies, including General Electric Co., Intel Corp., International Business Machines Corp., McDonald's Corp., Merck & Co. and Microsoft Corp.

But even if businesses succeed in holding off the plan, they are likely gaining only a temporary respite. While prospects for quick action on the idea this year are dimming, it is likely to become a central element in a broader tax overhaul the White House is planning, according to business lobbyists and legislative aides, as the administration searches for revenue to cover the costs of some of its big initiatives.

At issue is a longstanding feature of American tax policy that allows multinationals to avoid U.S. taxes on much of their overseas earnings, as long as the money remains invested offshore. Many companies use the rule to park overseas earnings in tax-haven countries for years.



Read more: http://online.wsj.com/article/SB123897085163290813.html

---

Courtesy of Antigop.

[ChromeFoundry]

1. Time to make good on some of those campaign promises. n/t

[wordpix]

56. my thought exactly. Obama promised to stop this jobs hemorrhage

What's this about "investing" in the offshore countries corporations are operating in? What are these "investments?" I just see the poor getting poorer both here and abroad. :mad: :puke: :grr:

[rwheeler31]

2. It is not just business but the investors.

[annabanana]

25. Well. . Investing IS a gamble. The risk is the reason for the reward. . .n/t

[babylonsister]

3. Boo hoo for those companies. Pay your taxes like everyone else

has to. :grr:

[Psephos]

13. Well, *almost* everyone else

everyone who won't be appointed to a cabinet-level position, that is

"Taxes are for the little people."
- Leona Helmsley

[Liberal_Christian]

19. LOL Helmsley should have been the spokesperson for "Reaganomics"

Would have been a little more accurate description anyway

[Psephos]

35. ain't it the truth? n/t

[earthboundmisfit]

4. One of the single BEST things that can happen is to remove these tax breaks

for these motherf*ckers. It's borderline treasonous. The taxes they've avoided plus U.S. jobs lost (yet more tax revenue lost).... :grr:

[Hello_Kitty]

5. Protect America's Competitive Edge?? WTF?

That takes the prize for most Orwellian named organization of the decade!

[liskddksil]

6. John Edwards told it like it is

Corporate America makes the rules. I wonder why their cohorts went to such lengths to ruin him (not that i'm excusing his actions-just the treatment from the media).

[Divine Discontent]

8. EXACTLY - when John Edwards spoke BRAVELY about the corporate crooks he spoke the views of millions

And you could see the disgust about the rich corps getting away with treason against the US for not having to pay taxes. It has to end now, and Pres. Obama will show his true colors for us by how he handles the wealthy we all have fought against - I'm keeping my fingers crossed that he's got the same mindset as those of us who are sick about corporations taking advantage of the country.

[Pastiche423]

47. Yep, he was so brave

he went to work for a hedge fund to learn about poverty. :eyes:

The gullibility on this site is amazing.

[Liberal813]

49. They will never accept the concept of One America

Despite some recent public embarrassments, corporate America, for the most part, still calls the shots in our society. Often, the only buffer between their power and the average citizen, is the service rendered by fair minded trial lawyers, whether in private practice or the halls of government.

[MrModerate]

7. This is actually bad policy . . .

The money earned overseas is already taxed where it's earned. If you're incorporated in Delaware, but you make your profit on some widget you make in Taipei and sell in Barcelona, why should you be taxed in the US? Similarly, if you work in Saudi Arabia -- and are out of the country for years at a time, and are paying taxes in Saudi Arabia -- why should you pay income taxes in America? None of the other industrialized nations tax their expatriate citizens. (Admittedly, it's more complicated than that, but the preceding statement is essentially true.)

Overseas profit tax has nothing to do with outsourcing jobs. It has everything to do with America remaining competitive in an increasingly globalized world.

Sorry, guys, on this one I think the Obama administration is dead wrong.

[Liberal_Christian]

15. "The money earned overseas is already taxed where it's earned"

True, but when it costs you 19 cents to make your widget overseas and you sell it here for 19 dollars then you're probably not as enticed to open up factories in the United States. In that light, it has everything to do with outsourcing.

[Butch350]

31. THANK YOU!!

[mbperrin]

20. Sorry. If they want to "earn" money overseas, incorporate there.

Build there. Sell there.

If you do any of those things here, you're sucking up the infrastructure, so pay for it.

Enough of the kleptocracy.

Should charge those bastards an exit tax to return in full all infrastructure expenses already incurred plus a current value for future infrastructure destroyed, neglected, or damaged.

Savings on overseas operations are phony and gamed. When true expenses are figured in, this is the best place in the world to build, to sell, to live.

[slutticus]

32. Don't they do that? Isn't that the loophole?

US company "X" builds a plant in singapore. They create a shell company "Company X Singapore Ltd." and then they manufacture their goods there that they only sell overseas.

Or is the problem with the companies that are importing goods back into the US after manufacturing overseas?

[mbperrin]

37. Yes, that's the loophole they need to close.

Both ways.

Thanks for asking!

[tomm2thumbs]

27. Well, if they want American customers they are going to have to reconsider

Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress. The study by the Government Accountability Office said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Hmmmm.. I guess American taxpayers are paying for those companies to operate tax-free in the U.S., paying for the roads, rail, the ports, the distribution centers, the water systems, the electrical grids, etc. for them to sell their products.

[Roadcyclist]

9. Tax these fucking monopolies to rebuild the country they destroyed

[Fire1]

42. My sentiments exactly and I don't care what it takes or how

long. Btw, Welcome to DU!:hi:

[OhioChick]

45. Agreed and Welcome to DU!

:hi:

[BlueJazz]

10. All I had to read was "The Chamber of Commerce" to know that whatever..

..the CofC opposes, It's a fair and great deal for the American public.

The "Chamber" has to be one of the most Sleazy, Right-Wing, Scumbag organizations in the World. :puke:

[Amonester]

11. corporate lobbyists vs. we the people

and the winner will be (????)

CHANGE in this case should be ________ (because no CHANGE is corporate lobbyists, as always...)

[Liberal_Christian]

12. How can you "Protect America's Competitive Edge" if you never let them use it??????????

What's better for our economy? Jobs? or outsourcing?

[Hulk]

14. Oh NO!!....there go the profits!!

Might have to pay $10 more for that computer service or fry pan next year. Oh my God!! Brace yourselves America.

[christx30]

16. But we might have

jobs to earn that extra $10

[Liberal_Christian]

17. Bingo

but only if they're the "patriotic Americans" they claim to be.

[aquart]

18. Bash their bloody teeth in.

Call them unpatriotic.

[greengestalt]

21. Hamper recovery efforts!?

Let's see:

Re-enact tariffs. Sensible ones so something made outside the USA costs as much as it's equivalent in the US, plus 5 cents. Let us only compete with overseas markets by quality. Will they raise tariffs on our products or block them? Uh, as if they don't already?


End "Tax breaks and Subsidies" to outsources. The real thing that should get us rioting mad is that it is NOT cheaper to outsource. The cost of transport alone makes up for the lead paint and death-camp wages. The companies then get (and Clinton opened the door wider, I'm not being partisan) tax breaks and subsidies so they make a profit rather than a loss. In short, we pay them to sell us short.


Illegals: We don't need no stinkin' fence... Just enforce existing laws by checking low-paying employers and prosecuting to the letter of the law. They have 10 illegals, throw the book at them ten times once after the other. We'd only have to do it once or twice and they'd stop hiring them without proper papers.


So, if we shift back from China to the US for manufacturing we'll have excellent quality and wages. China would either collapse or re-shuffle it's deck and manage without us. Mexico would have a long-overdue civil war that needs to be settled. And America would have a 50s/60s economic boom again.


The rich elite would go back to 20X average good wage as opposed to 200X+, but let 'em cry.

[Left Coast2020]

22. Bravo President Obama. Now don't just talk about it, do it.

Earthbound is on the mark for stating these corporations are "treasonous" to have there plushy offices in Manhattan somewhere, and a P.O. Box on an island with no tax laws. Absolutely disgusting. If these corporate bastards don't want to pay their fair share of taxes, then move to Siberia and take your company with you. And don't forget to leave your American passport here.

If Obama is going to fight these crooks, he will need our help. We can't just sit on our collective asses and expect he will do it all. No. We need to back him on this or it won't get done. We helped him get in, now we need to help him in his job. Simple as that.

:kick:

[marasinghe]

48. exactly right.

why is it that - most ordinary folks can understand this pretty basic equation, but we can't elect enough reps & senators to get it done?

and, whenever there's a decent person - like, say, kucinich - who has the guts to carry out the job, we throw him under the same bus that's carrying a bunch of elitists, from the party du jour, into the driver's seat.

the stupidity of humanity en masse, is the most amazing attribute of our species.

[guruoo]

23. This is part of Obama's anti-outsourcing effort that you claimed doesn't exist...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5386916#5387298

[OhioChick]

33. I asked you to provide links and you didn't.

:shrug:

All I've heard is what Obama said during his recent town hall meeting:

US doesn’t need outsourced jobs: Obama

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=436641&mesg_id=436641

[guruoo]

36. OK, here's the link...

from your own post. He's proposing to end tax breaks on companies
that outsource. All that's left is for Congress to introduce,
and approve into law legislation putting Obama's proposal into effect.


APRIL 6, 2009

WASHINGTON -- In one of the biggest battles between the business community and the White House, corporate lobbyists are intensifying efforts to block an Obama administration proposal to raise taxes on overseas profits. Executives say the measure, which could cost U.S.-based multinationals $100 billion over the next decade, would hamper economic recovery efforts.
http://online.wsj.com/article/SB123897085163290813.html

[OhioChick]

38. Yes, my link from April 6th....

We had the above conversation on the 4th of April, in which you couldn't provide any links.

I'll believe the above story from today...when I see it happen. Talk is cheap.

[guruoo]

51. The President does not have the authority to introduce, or enact legislation. n/t

[OhioChick]

52. Then, what was with all of the campaign promises?

All for votes, or what?

[guruoo]

53. What campaign promise? Link?

I can't find it.

[OhioChick]

54. Once again.....

Obama opposes outsourcing of jobs
Agencies Posted: Jun 28, 2008 at 1133 hrs

Washington, June 28: Taking a tough stand against outsourcing, the presumptive Democratic nominee Senator Barack Obama said that the choice is between giving tax breaks to companies that ship jobs overseas or give benefit to those corporations that keep jobs domestically.
"We can keep giving tax breaks to companies that ship jobs overseas, or we can give tax benefits to companies that invest right here in New Hampshire," Senator Obama said at a joint appearance with Senator Hillary Clinton in Unity, New Hampshire.

"We can have a tax code that rewards wealth and hands out billions of dollars more to big corporations and multimillionaires. Or we can provide a USD 1,000 tax cut to 95 per cent of families in America, start rewarding work and not just wealth, and eliminate income taxes for seniors making USD 50,000 a year or less," Obama said, adding that's an agenda for change that we can believe in. That's the choice that we can make in this election.

"We can allow millions of Americans to work full-time but still not make enough to support their families, or we can raise the minimum wage, index it to inflation, and ensure that hard work pays off in America," the Illinois Senator said.
http://www.expressindia.com/latest-news/Obama-opposes-outsourcing-of-jobs/328689/
___________

Obama vows to stop outsourcing, India Inc irked
started by TruthSeeker 7 mnths ago

Washington/New Delhi: In remarks that are bound to raise hackles in India, Barack Obama made a strong anti-outsourcing pitch after securing the Democratic Presidential nomination vowing to end tax breaks to companies that ship jobs overseas if elected to office.

Playing to the gallery on the hot button issue of outsourcing in his acceptance speech, Obama kept up with the rhetoric on the subject that has been a staple of Democratic campaigning and went on to spell out what he would do as President on the front.

"Unlike John McCain, I will stop giving tax breaks to companies that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America," said Obama, who has been fiercely opposing outsourcing.

Source: http://ibnlive.in.com/news/obama-vows-to-stop-outsourcing-india-inc-irked/72512-2.html_____________

Obama vows to award US cos that stop outsourcing
Agencies
Posted online: Sep 04, 2008 at 1250 hrs

Washington, September 4:US Presidential hopeful Barack Obama once again touched on the ticklish issue of outsourcing and while vowing to end tax breaks to companies that ship works overseas conceded that all lost jobs could not be redeemed.

Promising to retain as well as create more jobs for the Americans, the Democratic nominee said while all lost jobs cannot be redeemed, further movement can be halted by giving incentives to companies investing in the country.

"Not all jobs that have left are going to come back. We can stop some of them that are already leaving by stopping to give tax breaks to companies that are shipping jobs overseas and saving those tax breaks for investing in plants and equipment right here in the US," Obama said at a campaign stop in Ohio.

http://www.expressindia.com/latest-news/Obama-vows-to-award-US-cos-that-stop-outsourcing/357238/____________________

Outsourcing critics worry about Obama advisors

By Krishna Kumar V. E.
December 10, 2008


Outsourcing critics worry about Obama advisors

Critics of outsourcing who saw in Barack Obama their saviour, are now worried that the President-elect of United States may tone down his commitment to stop sending jobs offshore because of pressure from his advisors.

Noted Wall Street Journal writer William J. Bulkely believes that the reason for such a meltdown in Obama’s position could be that as many as 17 members of his transition economic advisory board are corporate honchos who have a long history of outsourcing.

Bulkely quotes Ron Hira of the Rochester Institute of Technology and author of the famous book ‘Outsourcing America’ as saying that the Obama team is yet to take up the issue of white-collar outsourcing very seriously.

The President-elect had promised to stop tax breaks to companies that shifted jobs overseas, a position that he still holds but could be forced to change giving the diverse opinions held by members of his transition team.

The blog says that almost every member of the advisory board that has been involved in corporate America has been connected to outsourcing. The author goes on to say that the companies where these advisors worked earlier are refusing to comment now.

http://www.bpowatchindia.com/bpo_news/obama_outsourcing/december-10-2008/obama_advisors_are_pro_outsourcing.html

These were "campaign promises" that won the majority of Ohioans over. You continue to ask me to supply you with links in which I do/have. Where are your links to prove otherwise?

[guruoo]

58. So where's the campaign promise to stop outsourcing that you were refering to?

I don't see any promise to end outsourcing, all I see here is a vow to end tax breaks
for companies that do it:

"Unlike John McCain, I will stop giving tax breaks to companies that ship jobs overseas,
and I will start giving them to companies that create good jobs right here in America,"

And of course we all now know (thanks to your later post) that he has done his part in the
process by issuing the proposal to Congress, which means the ball is now in their court.

Looks to me like your beef should rightly be with Congress, not the President.

Here's a couple of links to information that will help you to
understand how the process works:

How the Legislative Process Works:
http://thomas.loc.gov/home/lawsmade.toc.html
Explanation of the Different Types of Legislation:
http://thomas.loc.gov/home/lawsmade.bysec/formsofaction.html

[ChromeFoundry]

55. Dude....She's provided more than enough links. Google is your friend. n/t

[guruoo]

59. See...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3817143&mesg_id=3822981

[ChromeFoundry]

60. Thanks for clearing up

...the obvious fact that you are not the sharpest tool in the shed.

P.S. Thanks DU, for the ignore feature... 'click'

[Kalyan]

24. pragmatic approach...

Most of the money is neither in India nor China - the 2 outsourcing destination favorites. They are parked offshore in tax havens and US has a taxation agreement with most to avoid double taxation. So, here is my 2 cents:

(1) If the profit is generated in Country X and taxes (tax %=Y%) have been paid in Country X, the company has to pay (35%-Y%). For eg: let's say tax in Australia is 25%, the company paid 25% of it's Australian profits in tax. However, there is a loss of 10% when compared to US and hence 10% of australian profits needs to be paid by the parent company in the US as taxes.

over a period of time, companies across the globe will reach a equilibrium on tax rates.

(2) If the profit is generated in Country X and repatriated to Country Z, the company pays 39% tax irrespective of whether it paid tax in Country X & Z. For eg: let's say that a company incorporated in Mauritius does business in India, it enjoys a lot of tax advantages. The company would pay near-zero tax in India because the money has to be expatriated to Mauritius; in Mauritius the company pays near-zero tax because of the tax rules. The parent company HQed in US will now have to pay 35% tax because it avoided taxes elsewhere. Hence, over a period of time, the concept of tax havens will vanish.

If these two solutions are implemented & the govt gets it's share of taxes, who knows - we can see a cut in corporate tax rates.

Companies cannot avoid these taxes by setting up HQs outside US. Companies incorporated outside US will be given lesser rights than US incorporated companies. eg: Companies HQed outside US have to pay higher tax rate to do business in US; Companies outside US cannot be make $2 bn in US else will be considered as US HQed company for tax purposes.

Bottomline: Remove tax-havens. Companies that outsource work typically make very little profit in their cost centers (China, India, Eastern Europe, SE Asia). It's the profit centers that needs to be attacked.

[tomm2thumbs]

26. I think the American people have a thing or two to say about this

[Vinca]

28. Economic recovery would happen a whole lot faster if

American jobs weren't shipped overseas. Tax the pants off them.

[TygrBright]

29. Excuse me. It could cost them $100 billion? HOW much was that last bailout?

Sorry. I'm not impressed by the magnitude of yer suffering, corporate weasels.

dismissively,
Bright

[Pepe Ronny]

30. this will raise much needed revenue

CEO's will think twice before setting up business in other countries rather than creating jobs for our economy now that it most needs them.

[closeupready]

34. This is about greed and lining their pockets with as much cash as possible.

They do not want to see income inequality disappear. They want more poor people, even if those are Americans we are talking about. Maybe especially, since more poor people mean the rich are even richer by default.

[katandmoon]

39. The isn't isn't if Obama will cave, the question is when. Because cave he will.

[OhioChick]

41. From what I've seen so far, that's what I'm expecting. n/t

[acmavm]

40. Let's see how hard they push for this. It could tell us a lot.

[Fire1]

43. I say, get ready for a wait. You already know Corporations

are going to fight this, tooth and nail.

[OhioChick]

44. With unemployment so high and growing...

People will eventually take to the streets.

[Fire1]

46. Bite your tongue! How would that look, politically, for Obama?

:dilemma: and:sarcasm:

[HughBeaumont]

50. And when people DO protest the eventual cave, DON'T protest Washington.

Find these CEO sons of bitches houses, fuck the security guards and CAMP there. Sit in the lobbies of their corporations en masse. Their security guards aren't that great in numbers and they will not take all of you out. Make them get that we aren't taking this anymore, the greed IS going to stop and they WILL start playing ball.

[wordpix]

57. "General Electric Co., IBM., McDonald's Corp., Merck & Co., Microsoft"

Time to sell these companies' stock. Think I'll send this article to the social investment fund manager for my retirement fund. See what a little bad press will do. :evilgrin: