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Obama Proposes One-Time Tax On $2 Trillion US Companies Hold Overseas
mrspoonsi writes with news about a new proposed tax on overseas profits to help pay for a $478 billion public works program of highway, bridge and transit upgrades. President Barack Obama's fiscal 2016 budget would impose a one-time 14 percent tax on some $2 trillion of untaxed foreign earnings accumulated by U.S. companies abroad and use that to fund infrastructure projects, a White House official said. The money also would be used to fill a projected shortfall in the Highway Trust Fund. "This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely," the official said. "Unlike a voluntary repatriation holiday, which the president opposes and which would lose revenue, the president's proposed transition tax is a one-time, mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated." In the future, the budget proposes that U.S. companies pay a 19 percent tax on all of their foreign earnings as they are earned, while a tax credit would be issued for foreign taxes paid, the official said.
Which will be to shit all over this idea. Mind you, I agree that so-called "windfall taxes" are a bad idea, but corporation that profit from shipping jobs overseas, hiding assets overseas, etc., are nothing if not "un-American", a label the hypocrites of the far right are very fond a throwing about. So yeah, another populist idea that is going to go nowhere.
People forget that the United States has one of the highest corporate tax rates in the world, and we impose it on American companies foreign-earned capital if they should bring the money back to the States. If you are responsible to the shareholders to be stewards of their investments, you have to take whatever measures you can to avoid heavier than necessary taxes. Hence people park their money off American shores.
This seems like a cash grab to me, where the better option is to really reform the tax code to be equitable within and outside the United States; then the responsible steward of their investors money would feel more free to have that capital here. 20% of 10 million is a lot more than 35% of zero.
"Who are you?" "No one of consequence." "I must know." "Get used to disappointment."
Because hiding your profits overseas is some sort of essential liberty, right?
The world's burning. Moped Jesus spotted on I50. Details at 11.
Actually essential liberty is not having your property and earnings stolen from you by any government. In this case, however, the government in question is trying to steal money it doesn't even have physical access to and the money that were not earned in the USA. It's trying to steal money that was earned from foreign operations from foreign customers. Back to the international form of socialism for Obama, I take it? Well, foreign earnings will not come back to USA at all ever of-course and all the companies have to do now is start moving their headquarters from the USA. Production lines are already moved, they just have to take the next logical step.
You can't handle the truth.
I'm not glad to see it at all. It's simply an extension of America's weird world view that they should be owed taxes on money not earned in America.
No other country has this odd view, instead, money earned abroad is taxed abroad.
The US tax system also has weirdnesses like this for anyone who's a dual national or green card holder... Dual US/British citizen and earning money in Britain? Great, you'll be paying both UK and US income tax on that!
This is clearly aimed at companies abusing the "Double Irish" system.
Probably but I don't see how it will work. What is to stop companies registering themselves elsewhere so that they are no longer US companies and then only their US operations will get taxed? Even if this strategy does not work they have an army of lawyers using the legal system of every country in the world to figure out workarounds that will work.
... and he has zero pull there... so... he can write executive orders and talk to foreign leaders and engage in 'police action' wars... but... he cannot pass tax policy.
If he ACTUALLY... seriously... wants to pas a tax bill... then he has to talk to congress first. And... he hasn't done that in awhile.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
I thought it was the corporations stealing by leeching off society and then not paying the membership fees. If they don't want to pay any tax they are free to leave society and stop stealing our free education and training, healthcare, roads, police and judicial services etc.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
"to avoid paying their fair share"
That phrase "fair share" is dishonest. It is vague and subjective, while pretending to be objectively normative.
That is exactly right.
Social Security and Medicare costs are only going to get worse as our population ages. And those costs are what is really tanking the federal budget. Not welfare queens or other conservative mythical leaches on society.
And over the past 20 years, our wages have declined and our standard of living has declined also - but worker productivity has gone through the roof.
Big business and the billionaire class has taken the difference and none of that has ended up in the workers hands. We are working longer and harder and our lives are getting worse.
That $2 trillion represents part of that difference.
Does Obama huddle up with a flashlight and a copy of Atlas Shrugged under the covers every night thinking that it's some kind of instruction manual? Every time I start to warm up to the guy a little, he pulls this kind of nonsense to remind me why I voted against him.
All it will do is cause US companies to become foreign companies incorporated in other jurisdictions. And then there will be less taxes collected. There are reasons why these things have not been addressed already and contrary to what some may think, they have little to do with politicians being paid off.
This is little more than posturing for the 2016 elections. No one expects anything to be done about it, just a lot of hype to define sides and make up short comings noticed in the last election.
Because hiding your profits overseas is some sort of essential liberty, right?
The profits were earned overseas, mostly from products and services created by non-Americans and sold to non-Americans. There is no rationale reason for America to be taxing these profits. No other country has this kind of extraterritorial tax. Most economists agree that it is counter-productive, and just encourages companies to base their headquarters somewhere other than America. Business taxes should be based on where the economic activity occurs, not where the business is registered.
Anyway, this proposal has ZERO chance of passing a Republican Congress. This is about electoral politics, not tax policy. The loser here is Hillary Clinton. To win in the general election, she has to position herself as a moderate centrist, that can win in the Midwest, and maybe even pick off a Southern state. But by steering the Democratic party into hare-brained anti-business claptrap, Obama is diminishing her ability to do that.
Mark my words, as we get closer to the election, he'll start breaking out the big guns. I'm sure he's already planning to talk about reproductive rights and race relations at some point along the way. I'm surprised he played immigration as early as he did but I'm sure it's going to come up again. I have to admit he surprised me on Cuba. Definitely didn't see THAT one coming.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Government 'education' is about as useful as government 'phone'. The next bubble to burst will be the government bubble, the bonds, the fiat currency and the entire idea of centralised governments that will be proven to be outdated and bad for society as a concept altogether. Hell, it is already proven to be a horrid, inhumane, oppressive, economically destructive, cancerous hazard to the individual well being around the world, it's just the masses haven't really understood this yet, so they will have to accept it on an instinctual level rather than on an intellectual one (they are incapable of understanding it intellectually, after all 'government provided education' oxymoron hits hard there).
You can't handle the truth.
American companies keeping profits in tax-free nations don't benefit from American taxes? Can you provide even a single justification for that?
If they don't want to pay any tax they are free to leave society
Wrong. They are not free to leave. The Obama administration prevented AbbVie from leaving, and is fighting efforts by other companies to leave.
stop stealing our free education and training
So if an Italian buys a car from a factory in Britain, he is "stealing education" if he doesn't pay tax to America?
What is to stop companies registering themselves elsewhere so that they are no longer US companies
Obama's solution is to make the laws even more restrictive by banning companies from leaving. Basically, erect a "Berlin Wall" for business. Of course, this is economic insanity, but it wins him plenty of applause from the Elizabeth Warren wing of the party. Here is an article that explains the issues pretty well.
Stolen, huh? So I assume you would rather the government dissolve, leaving no infrastructure, no property rights, and no justice system? You'll have to staff your own protection, since you don't want police or military defense. I guess the biggest guy wins... hope you like that new dictator.
But then I suppose you wouldn't care for that so much. You might at least want to form an alliance with your family and neighbors. Perhaps you'll agree not to steal from each other, and have the toughest men keep watch over the town and keep the dictator's army out. But they need to eat and can't keep watch all day while also worrying about growing their own crop, so the town decides that everyone should give part of their goods in exchange for the protection.
Then your town and others nearby might decide, we are reasonable folk and aren't each other's enemies. So you form an alliance and pool your resources to focus protection on the outer borders. Oh and since one town has a great market for clothing, and another has a nice oil well, and yet another has fertile land, now you need roads to travel between the towns. You pool your resources to help built those roads.
This is a system of government, funded by taxes. It is the inevitable outcome of humanity, and will continue to grow bigger so long as the people are mostly satisfied with that government.
All my liberal friends think I'm a conservative, all my conservative friends think I'm a liberal.
That phrase "fair share" is dishonest. It is vague and subjective,
A tax code which permits corporations to hide profits while taxing citizens normally is dishonest.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Liberty means no ex post facto laws. Earnings made before passage of any such law (which, let's face it, will NEVER pass with the current Congress - whether you agree with them or not) should be excluded from this. If the Government can retroactively tax your profits, then why can't they retroactively tax the earnings in your 401K? Change your Roth IRA to be taxed when you pull out funds when you retire? Decide to take any money you've saved in the past and tax it at a high rate in the future? Is that liberty?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Infrastructure is not a government concern
Infrastructure is a property rights concern. Property rights is a government concern.
Justice system and property rights do not require centralised governments, each locality can deal with it however it wants
So property rights is a government concern, just not a centralized government concern? I can see that logic. But then how do we deal with a citizen of town A owning land and things in town B? And how does the justice system handle the case of someone in town C coming to town B to steal things from the citizen from town A?
We could set up treaties between the towns, and have a documentation system to provide proof of citizenship and other details that matter. As for me, I like being able to drive to the next town to shop or eat or whatever I do, without needing to go through border checks.
thus if you want to use a road or have protection against attacks by bandits, that's your responsibility to hire your protection and to pay your road tolls
Golly, that's just what I want! To pay a body guard to ride with me in my Hummer with machine guns. And to have to stop to pay at every - single - entrance into every road, and from every road.
Actually no, that's not at all what I want. I want my 10-mile commute to take 15 or 20 minutes, not 3 hours waiting in lines at toll booths. I want to pay a reasonable amount of money for my drive, without having to pay by-the-hour for some guy to protect me as I drive down the road.
I don't like everything about our society. I don't care for many things our government does. I would change a lot of things if I had my way. But at the end of the day, I feel that all of that is relatively minor compared to truly horrible dictatorships where the people have no rights, no freedoms, poor health and are daily in fear for their lives and for the lives of those they care about. We should fight to make sure our society doesn't degenerate in that direction, but its useless to throw it all away just because it's not perfect.
All my liberal friends think I'm a conservative, all my conservative friends think I'm a liberal.
You haven't thought things through well enough. You imagine that you can pay for "protection from highway bandits" and that this is somehow different from government. Wake up. That is what government is. Protection from highway bandits. If you somehow managed to convince everyone to eliminate the U.S. government, then the question of roads would immediately pop up. Without roads you can't get to work or deliver products to markets. You can't have markets, because thieves and bandits would raid them. So, you would pay for your own private guards. Pretty soon, you would find that there are businesses providing protection. You would hire them, and so would other companies. But they would fight each other. Somehow, the fighting would ultimately get resolved. Either some warlord would emerge from the fighting as victorious leader who would impose order, or people would get together and vote on rules so that private protection companies would not fight. Rules, and a rulemaking process would evolve from your garden of eden of liberty. You can't avoid it. There are other people living on the planet. You have to get along with them. It isn't easy. You can't just say, "hey, this is my stuff, everyone keep their hands off of it" and expect everything to be fine. Again, wake up. Where did you get the stuff? Were you born with it? Did God pre-ordain that you own it? You don't think far enough ahead, and think about what will happen if you get rid of government. It will evolve again. And again. Everywhere. You can either react to it like it is some alien creature, or you can plan ahead, and try to optimize the rules that eventually evolve. Because rules will evolve, by force. It can either be a democratic force, or a dictatorial force. Or some mixture. But try not to be so simplistic in your thinking. It is frustrating to read.
Join the IParty!
Roman, go spend some quality time in the library (at taxpayer's expense, mind you) and read up on some history. Look at how well neo-anarchists have provided for the 'general good'. Look up some actual, functioning examples of libertarian philosophy.
And if you find any, come back here and tell us about it.
Yes, capitalism is pretty screwy. Doesn't work well. Not a stable system, needs lots of inputs to keep from feeding back on itself and destroying everything in sight. No, this 'civilization' will not last forever and has a number of major issues with it at the moment.
But your goofy system won't work beyond a 12 pack of brownies.
Faster! Faster! Faster would be better!
Because hiding your profits overseas is some sort of essential liberty, right?
The profits were earned overseas, mostly from products and services created by non-Americans and sold to non-Americans. There is no rationale reason for America to be taxing these profits. No other country has this kind of extraterritorial tax. Most economists agree that it is counter-productive, and just encourages companies to base their headquarters somewhere other than America. Business taxes should be based on where the economic activity occurs, not where the business is registered.
First of all, the profits were NOT made overseas as you claim. They were BOOKED overseas by "Me" billing "I" millions/billions in "licensing fees" to use "My" name. Essentially, they pay accountants (and Ireland) 2% to avoid paying actual taxes. Second, yes other countries do have these kinds of taxes, Australia on their citizens for one. Three, most economists don't agree on anything, just like "most" of any other non-hard science group. Physicists mostly agree on G and climatologists agree on AGW, but there's a pretty steep drop off beyond that stuff.
Finally, I think we can agree on the last point, but differ on interpretation. You appear to be saying that whatever third world hell hole (Sorry Ireland) their accountants claim is there "home" is what matters. I disagree. Where does Apple, Microsoft, etc sell the majority of its consumer products? Is it Ireland? Nevada? I don't think so. What is the citizenship of its majority stockholders? What country spends the most on military power, which is used to enforce and defend their intellectual "property"? I think those are the most salient points.
If Somalian based black flag maker "Ukata Dung Flags" makes his flags and sells them to local pirates, I don't the US should be taxing him. No one here who isn't trolling would suggest that. But if Bill Gates, Warren Buffet and the Koch Bros were to suddenly claim they were based out of a dock in Somalia, I don't think we should say "Oh, cool! Yeah that $40Billion dollar licensing fee to "Legitimate Licensing Company" in Somalia is a legit business expense, no profit or tax for your American business necessary. Roads, Courts, Police and Fire all free on US! Plus warships to protect your IP, for free, of course."
A common thread I see in these anti-tax schemes is complaints about the current status, but I never a better solution being offered by the "Boo Government!" aka "Boo Taxes!" crowd. Plenty of wishful thinking along the lines of "Me and the boys have rifles and don't need cops!" crowd, all of whom would die to toxic inhalation from arson from more depraved versions of myself in a crisis, providing me with a ready stash of guns and beans. That or they reveal themselves to be cowardly murderers who kill anyone within sniping distance.
Almost all of the design and administration of Apple is done in California. But surprisingly the "Company" is a foreign company where they have no factories, no designers, no corporate officers and just a bank account.
So yes, by using the talent and ingenuity of US workers and then claiming that they're an Irish Company they are stealing the value that US Society has invested into its workforce (and supplied the infrastructure for that workforce to get to the job site etc).
Personally I believe that we should tax not based on where they are located but where most of the value is created. If you are Microsoft and 90% of your workforce is in Washington State but you are incorporate in "Nevada" because you have a PO Box there then you should be taxed at 90% Washington 8% California and 2% Nevada tax rates. Similarly if 80% of your operations are in the US then you are 80% a US company and 80% of your revenue is taxable under US tax law.
Everybody knows that Apple is a California company. To say otherwise is dishonesty. It might legally be correct that Apple is a subsidiary of an Irish shell corporation but they're cheating the system and doing something that doesn't pass any sort of sniff test of truthfulness.
Did you have an argument to go with that assertion?
No system of taxation has ever gotten federal revenues above 19% of GDP for long, and corporate taxes are a fairly small portion of federal revenue to begin with. We only tax corporations out of some sense of social justice, not because it's a useful way to fund the government. The key ingredient to "saving the country" is to spend less that we actually take in in federal revenue. We can hypothesize all day about what might happen with some new tax plan, but long term if we don't spend less than we make, it will end in tears.
The proper goal and aim of the government is not to feather its own nest with larger taxes in the first place, but to grow the economy! I give 0 fucks whether corporations pay taxes here or not, the important thing is whether the incentives are to have jobs here or not - especially well-paying high-skill jobs! And each and every law that makes it more expensive to do business in America detracts from that,
But perhaps you had an argument along those lines?
Socialism: a lie told by totalitarians and believed by fools.
We "must" tax the corporation? What kind of goal is that? Do you see the end-goal of a government as being to tax everything it can as much as it can? Many people do, it seems.
How about, instead, the government works to grow the US economy as much as possible. More jobs, more income, the tax revenue thing will work out OK in the end.
. Don't like it, go somewhere like Somalia and conduct your business. Good riddance
No, you fool, how about we have more jobs here instead of your befuddled plan? Only a statist cares more about taxes than the health of the nation.
Socialism: a lie told by totalitarians and believed by fools.
It is not insanity. Trickle down economics is insanity. Reaganomics is insanity.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
You're completely off-base on the Hillary thing. To help Hillary, Obama need to take the party further left. It relates to the concept of the Overton window , the range of ideas that the public sees as palatable "centrist" positions. If you drag the dialog of the extreme edge further, then it makes less extreme ideas seem more reasonable. The Democrats need to get on this, as the right has been doing this for some time. People like Limbaugh and Hannity push the edges out so their candidates don't have to.
By pushing "anti-business claptrap" Obama gives her room to distance herself from him, room she can use in the election as she sees fit.
Personally, I don't feel that closing tax loopholes exploited by multinationals is "anti-business", more like "pro-fairness", if you allow one business to cheat, you force all to cheat to stay competitive.
How exactly is risking capital to produce products people willfully buy "leaching off society"? Which government service exactly are they skipping out on paying for? Why not send them a bill for that instead of stabbing in the dark at arbitrary sums? When did it become "greedy" to keep your own money, and "justice" to take someone else's?
Reaganomics is opportunity.
Really? Then why is upward mobility among US citizens the lowest is has ever been in the history of the country?
All it will do is cause US companies to become foreign companies incorporated in other jurisdictions. And then there will be less taxes collected. There are reasons why these things have not been addressed already and contrary to what some may think, they have little to do with politicians being paid off.
So all these companies that have offices, properties, production facilities, staff and what not in the US are just going to up sticks and go.
Utter tripe.
Sure, they'll whine, they scream and cry about how unfair it is that they cant hide their profit, but in the end they'll pay because they cant simply abandon their operations. A big part of their whining is trying to convince you that they will leave but it's an empty threat. If there were more money to be made by abandoning their US operations they would have done it already. The thing is, a lot of these companies cant move, they require something that they cant get outside the developed world. Be it highly educated workers, quality controls or just a lack of corruption. The louder they cry, the less able they are to leave so in the end, they'll pay.
They're acting like a toddler looking for attention, they'll keep getting louder and louder unless you start to ignore them.
Calling someone a "hater" only means you can not rationally rebut their argument.
Why do you think companies become "multinational" to start with? And if you run multinationals completely out of the US, then you'll never get ANY tax out of them.
It's insanity because it's based on the misconception that taxing companies is somehow different from taxing people. What do you think those companies will do if you increase their taxes? Roll over and just fork it over even if it puts them in the red? No. They're going to raise their prices, and/or cut their costs to compensate.
Ultimately, all taxes are paid for by taxpayers. Whether it's directly through income and sales taxes, or indirectly through corporate taxes which get passed on to customers as price increases and employees as pay cuts (or smaller pay raises). The end result is the same - less money for taxpayers, more money for the government.
You can argue that we need more taxation. But never make the mistake of thinking that taxing corporations has zero impact on taxpayers. It has exactly the same economic effect as directly raising taxes on taxpayers. The only thing that gets changed is who gets blamed (people curse the companies for raising their prices, instead of the government for collecting so many taxes).
* Numerical example for people who still don't get it. Say you make $50k/yr and pay $10k/yr in taxes, thus leaving you with $40k/yr to spend on yourself. The country changes law eliminating income tax, and getting all funding from corporate taxes instead. Do you think you'll now get $50k/yr to spend? No. Companies now have to pay an extra $10k/yr per citizen in taxes. So either your pay gets cut to $40k/yr, or prices increase 20% which after adjusting for inflation leaves you with $40k/yr just like before. You see, average real income is purely a function of productivity. And changing how taxes are collected doesn't change average productivity per capita. So where from the economy you extract taxes can't change the amount of real take-home pay. It's all just shell game.
The real issue is that everyone wants services but no one wants to pay taxes for those services. Not the corporations. Not the rich. Not the middle class. The poor will always get screwed no matter what. We borrow and spend, hoping that the check never arrives.
No, because you will always be undercut on the rate by countries which don't have to support such an extensive infrastructure (because they don't actually physically host those companies, other than a tiny office to claim legal presence), but which are interested in driving the rates down because that way they get to be the ones collecting them.
Of course, if you are one of those people who think that taxation is theft, all your points are going to be worthless within the context of this discussion. What does it matter to you whether it's US or Ireland "stealing" the money?
Gas tax is not even close to covering the maintenance costs of the roads in US.
And while the immediate beneficiaries of healthcare, education etc are individuals, corporations most certainly do benefit from a healthy and educated workforce.
Generally speaking, social stability that is provided by strong governments is conductive to good business, and the lack of it is detrimental.
if the profits were made in tax free countries, so be it.
If the profits were made entirely by employees working in that country, selling to people in that country, goods or services produced in that country, then you might have a point. In most cases, they're made from employees working in other countries, selling in other countries, and doing various tricks to book the income somewhere else.
No one objects to companies that are based in the Cayman Islands, working and selling there, paying no tax. People object to companies in the US and EU doing business there and benefitting from the infrastructure yet somehow paying a wholly owned subsidiary in the Cayman Islands a trademark license that happens to be of equal value to their total profits (or one of the various other similar dodges).
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