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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.
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.
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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!
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.
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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.
American companies keeping profits in tax-free nations don't benefit from American taxes? Can you provide even a single justification for that?
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.