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Battle Lines Being Drawn As Obama Plans To Curb Tax Avoidance
theodp writes "Barack Obama has squared up for a major battle with big business, announcing a crackdown on offshore tax avoidance and evasion by US multinationals that's designed to raise $210B and make it easier for companies to create 'good jobs here at home'. Obama cited a building in the Cayman Islands where more than 18,000 US companies are housed: 'Either this is the biggest building in the world or it is the biggest tax scam in the world,' he said. 'I think the American people know which it is.' The administration says that more than a third of US foreign profits in 2003 came from Bermuda, the Netherlands and Ireland, and noted US companies paid an effective tax rate of just 2.3% on the $700bn they earned in foreign profits in 2004. Among tech companies affected by the crackdown, Microsoft joined 200 companies who signed a letter complaining that the proposed tax changes would put them at a disadvantage with their rivals, Cisco moaned that the measures 'would adversely impact our ability to invest and grow our business in the US,' and Google declined to comment for the time being."
Am I cynical to think that these businesses will just raise the cost of their goods to cover the additional tax, thus making consumers the ones to pick up this $210 billion tab? I somehow doubt that publicly traded companies are excited to see the earnings hit show up in their quarterly statements.
You know the EU-Commissioner for financial regulation is Irish, he was the architect of the Irish tax evasion wonder for high tech companies.
When you buy software from Microsoft in Europe it comes from MIOL (Microsoft Ireland Operations Limited). Ireland is a gigantic tax evasion scam for American software companies which drain European markets including government customers without contributions to our social welfare states.
As one Hungarian said to Ballmer: Give us our money back!
Usually when the government lowers taxes they see an increase in tax revenue because of increased spending since taxes are lower
No. This is the often-marketed Supply Side tax cut effect that is, as shown here, incorrect.
The correct statement is that a cut in taxes does not reduce tax revenues dollar for dollar. This is also over the long-term, like 30+ years. For instance, the Kennedy era tax cuts eventually reduced tax revenue by 70% of expected receipt.
While I do not have direct citations back this up, it has been the recent trend that the sellers of Supply Side Tax cuts to the Republican party have had to claw back the extreme claims. I think Bruce Bartlett has spent recent history setting the record straight. You can also find more information among Krugman's public articles.
I always get the shakes before a drop.
Geithner did not make a mistake, he's a tax cheat.
I block the Politics section for a reason
But Slashdot seems more and more obsessed with ramming the Politics section down everyone's throats.
First I had to block the Your Rights Online section because it morphed into Your Rights COMMA On-Line.
Then Science, because Slashdot turned it into a Creationists/Stem Cell debate section
Now, 3 stories in the last few weeks have leaked out of Politics (where they rightly belong) and on to the front page/News
Dear Self-Important Editors:
You (yeah you) created sections and the ability to block sections for a reason.
Maybe you should show some self-restraint and put you Damn Fucking soap boxes back in their proper sections.
I and many others have no desire to be subjected to stories, the main point of which seems to be running screeds on how "Jews control the GOP" or how "Ron Paul was right".
Your inability to observe the standards of conduct you yourself created shows an utter lack of class.
One: The Congressional Budget Office issued a report to that effect in 2005 (when the US federal government was entirely Republican-run). http://www.cbo.gov/ftpdocs/69xx/doc6908/12-01-10PercentTaxCut.pdf
Two: Nobel prize laureate James Tobin, for another. In 1992 he wrote that "[t]he 'Laffer Curve' idea that tax cuts would actually increase revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981."
And three, economist Paul Pecorino calculated in 1995 that peak revenue was generated at a tax rate of around 65%, much higher than current tax rates in the US.
And guess who winds up paying for the taxes companies pay? Yep, the people that buy the products. Taxing a company is still taxing the people, just adding another layer onto taxation.
That's not to say corporate income shouldn't be taxed; that may be the most efficient means to collect the needed revenue. But let's not kid ourselves by thinking that taxing companies means the "evil rich" will be paying taxes instead of "the common people".
The meek may inherit the earth, but the strong shall take the stars.
There are two main factors that make Delaware a popular jurisdiction for incorporation. First, there's no corporate income tax for revenues that are made outside of Delaware, and the other is that Delaware's laws make it very difficult to pierce the corporate veil in litigation.
Several other states are trying to follow suit. Nevada's a fairly popular one, too.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I think you probably couldn't name 3.
Most studies of hard economics relating to tax policy point out that we're substantially below the "optimal rate". Most estimations put that between 40% and 50%.
Papers that draw this conclusion, or at least have suggestions in this direction include:
Mirrlees, 1978
Seade, 1977
Tuomala, 1990
Sandmo, 1977
Wilson, 1993
Ballard and Fullerton, 1992
Dhalby, 1998
Stern, 1976
Piketty, 1997
Roberts, 2000
Atkinson, 1990
Kanbur, 1994
However, most are also very clear in stating that optimizing revenue is NOT necessarily the best rate. It is important to weigh social needs and competitiveness with alternative locales, population happiness, etc.
Most of the world has adopted top marginal rates just below 50%. The US was in that category until the 1980s. Upon reducing that rate, the US began leading all industrialized countries in terms of deficit-to-GDP ratios. While most economists point out that this is likely a combined result of increased spending, rather than tax cuts)... however, tax cuts that occur below the 35% range have never really been shown to increase revenue... In fact, most models suggest the opposite.
If you can cite ANY papers that have specifically defined models that account for opportunity costs, economic elasticity and a cohesive mathematical model, please point them out as I'm not aware of anything in that camp isn't ideological punditry from the Cato Institute or the Heritage Foundation or other similar politically motivated organizations.
Thanks!
I don't think you understand what several of the mentioned politicians actually did. They weren't honest mistakes.
I think a number of your assumptions are incorrect ...
The money used to pay off expenses, pay employees, buy/rent offices and equipment is not taxed (there might be payroll and income tax on each employee, there may be state taxes of various sorts but the federal government will not treat these expenditures as taxable income).
Similarly, investments in expansion are likewise not taxed (as long as these are essentially along the lines of the above)
It is only income the companies hoard or distribute as dividends that is taxed.
The funds distributed as dividends are not subject to double taxation. Indeed, as per the Jobs and Growth Tax Relief Reconciliation Act of 2003, dividends are taxed as capital gains not as income so it's not even 'single dipping', never mind 'double dipping'.
You sound like someone who has a single job, no family and doesn't own anything. Of course then taxes are easy. Start a side business, add in a family, various retirement accounts, non-retirement stock accounts (ETFs end up being different beasts all together), home ownership, etc... and you'll see that taxes are way too complicated.