Skip to main content

View Diary: 'Fix the Debt' operates as a front for corporate tax breaks and cuts in government social programs (127 comments)

Comment Preferences

  •  So, what do you think about the plan.. (18+ / 0-)

    ...to let these companies bring their money home free and clear? Do you think that, given a territorial tax set-up, they'll play Microsoft's game and conceal domestic profits as overseas profits and pay their top dogs bigger bonuses? In other words, do you think this scam is good for America the way the Fix the Debt people do or do you think they deserve a smackdown?

    Don't tell me what you believe, show me what you do and I will tell you what you believe.

    by Meteor Blades on Wed Nov 14, 2012 at 09:09:07 AM PST

    [ Parent ]

    •  I pretty much agree w/ your take. (10+ / 0-)

      Corporate tax is a messy, messy subject.  It seems to me that the current system is fine substantively, but the real problem is one of enforcement.  

      One response to enforcement issues is to just ditch the prohibitions, and this is the response we see from the proponents of a territorial tax system.  But, as you note, that doesn't really solve the enforcement issue so much as defer it to a different tax system and is as likely to exacerbate the problem as it is to fix it.  Corps will continue to game the enforcement problems, but will now be able to do so to even greater advantage.

      IMHO, the current system is substantively fine.  Rather than change the rules, the answer is to solve the enforcement problems rather than forfeit the game from the outset. How to do that?  Tough question, and one I don't really have an answer to right now.    

      One other argument that the territorialists make is that, in order to stay competitive w/ EU countries, most of whom use some form of the territorial system, we need to adapt to them.  That strikes me as pretty lame: tax is certainly one factor in picking a home jurisdiction, but it's very often overstated.  Companies are much more likely to look to access to solid capital markets and reasonable regulatory regimes, and I think the US has a very strong competitive advantage on both of those scores.  IOW, the tax arbitrage argument just isn't very compelling, at least not now or for the foreseeable future.

      •  BTW, when I'm talking about "enforcement," (14+ / 0-)

        I'm often thinking of structural enforcement (note: that's a term I just invented).  When a company does something unlawful or dicey and the IRS doesn't find out about it, then I'd think of that as a standard enforcement issue.  OTOH, what we see in intl tax is pretty different.  Companies that do a lot of intl business often reach agreements w/ the IRS in advance on issues like transfer pricing.  The problem is that, for the IRS to overcome non-insane proposals by the company, they have an uphill battle on a highly fact-sensitive legal terrain, and often don't have the resources or will to combat the presumptions that are stacked against them.

        There's nothing illegal about any of that, and if I were a company I'd do the same damn thing, but it's a policy problem that we need to find an answer for.

        Or, as the saying goes, the problem isn't what is illegal, but what is legal.

        •  Thanks for you input on this diary, I'm learning (4+ / 0-)

          a lot.

        •  I think your summary (9+ / 0-)

          in the last sentence (even if it is a saying) is the one people need to key in on overall.

          Tweaking marginal rates doesn't really fix the problem when so much of the tax code is written in such a way as to make many of the income sources of the very wealthy and multinational corporations immune from capture for tax purposes in the first place.  Zero rate or one hundred percent rates don't matter if its not taxable income.

          •  yup (3+ / 0-)
            Recommended by:
            jfromga, Timothy J, divineorder

            but if we did that, the companies would leave america, so they say.

            i say good riddance and have fun living in a third world country.

            -You want to change the system, run for office.

            by Deep Texan on Wed Nov 14, 2012 at 11:15:13 AM PST

            [ Parent ]

            •  they seem to be staying here (7+ / 0-)

              collecting subsidies while sending the jobs overseas.  We get the bloated CEO's buying our politicians, we get them interfering with rational regulation of the environment and workplace, we get inundated with their reinforcement of social wedge issues to keep lower income whites in line, and we still see them offshore jobs.   I think there ought to be standards that recognize income as income,  come up with realistic rates and let the chips fall where they may.   If we end up a little poorer, but in control of our government, more egalitarian, less polluted, we might still be better off.

              •  we can change that (1+ / 0-)
                Recommended by:
                jfromga

                problem is we have to work within a certain framework.

                if Obama came out and said everything we have been saying, then the national press would have a field day.

                there is no debt crisis!  we are a rich nation.  the rich can and will pay more.

                they would rake him over the coals everyday and guide the public into believing Obama doesn't care/understand/fear the national debt problem.

                -You want to change the system, run for office.

                by Deep Texan on Wed Nov 14, 2012 at 01:19:37 PM PST

                [ Parent ]

            •  Deep Texan - the companies would keep (1+ / 0-)
              Recommended by:
              Deep Texan

              their US operations in place, just move the tax home to another more tax friendly country. The companies would continue to owe tax on their US operations, but not on world wide income.

              "let's talk about that"

              by VClib on Wed Nov 14, 2012 at 08:03:54 PM PST

              [ Parent ]

              •  Quite a few Texas oil service companies have (2+ / 0-)
                Recommended by:
                VClib, Deep Texan

                moved their tax home to Switzerland - especially offshore oil companies -  which is noteworthy in that Switzerland has no oil and no offshore.

                The most important way to protect the environment is not to have more than one child.

                by nextstep on Wed Nov 14, 2012 at 11:31:47 PM PST

                [ Parent ]

                •  nextstep - I think this trend will increase (1+ / 0-)
                  Recommended by:
                  Deep Texan

                  It was interesting that when Bain Capital acquired the sensor technology group from Texas Instruments they acquired  it with a Dutch shell, renamed the company Sensata Technologies, and later took it public on the NYSE (symbol ST). The headquarters are in Massachusetts and they have world wide manufacturing and sales. I haven't done any research on why incorporating in Holland is advantageous, but I predict that more companies will move their incorporation domicile out of the US.

                  "let's talk about that"

                  by VClib on Thu Nov 15, 2012 at 12:45:19 AM PST

                  [ Parent ]

                  •  only if we let it (0+ / 0-)

                    maybe we need to setup our own pac for 2014 that runs ads on all this stuff.

                    -You want to change the system, run for office.

                    by Deep Texan on Thu Nov 15, 2012 at 06:35:04 AM PST

                    [ Parent ]

                    •  Deep Texan - Congress can change the tax laws (1+ / 0-)
                      Recommended by:
                      nextstep

                      but a private company can change where it is incorporated, even to another country. Companies would need shareholder approval to make the change, but the US government can't stop it.

                      "let's talk about that"

                      by VClib on Thu Nov 15, 2012 at 06:54:11 AM PST

                      [ Parent ]

                      •  there are plenty of things we can do (0+ / 0-)

                        congress pass all kinds of laws.

                        -You want to change the system, run for office.

                        by Deep Texan on Thu Nov 15, 2012 at 07:05:49 AM PST

                        [ Parent ]

                        •  If two different companies have exactly the same (0+ / 0-)

                          operations around the world, why should the amount of tax they owe the US be different if one is incorporated in the US  and the other is not?  Should their taxes be based on their economic activity or where they happen to file a document?

                          The most important way to protect the environment is not to have more than one child.

                          by nextstep on Thu Nov 15, 2012 at 07:47:38 AM PST

                          [ Parent ]

                      •  The problem is a broken tax policy (1+ / 0-)
                        Recommended by:
                        VClib

                        What a company owes in taxes should be independent of what country they are incorporated in.  

                        The most important way to protect the environment is not to have more than one child.

                        by nextstep on Thu Nov 15, 2012 at 07:28:28 AM PST

                        [ Parent ]

              •  we can change that (0+ / 0-)

                it's within our power.

                or it will soon be within our power.

                -You want to change the system, run for office.

                by Deep Texan on Thu Nov 15, 2012 at 06:34:21 AM PST

                [ Parent ]

      •  Access to Capital Markets not tied to Tax home (5+ / 0-)

        The decision on choosing a tax home for a corporation is not really tied to access to capital markets.  For example, many companies that have a tax home outside the US, issue shares and sell bonds in the US market.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Wed Nov 14, 2012 at 10:53:02 AM PST

        [ Parent ]

    •  MB - I struggle with two issues (1+ / 0-)
      Recommended by:
      nextstep

      All or nearly all of the G20 taxes on a territorial basis, so we are the outlier. The other is that when companies have all this cash abroad they can invest overseas with 100 cent dollars, but if they bring it home they invest with 65 cent dollars. As any of us who have done ROI modeling for investment, expansion, or capital spending knows you can't overcome that differential and make US investments competitive. I also think none of the companies will ever bring the cash back at a 35% tax. So what is 35% of zero really worth?

      "let's talk about that"

      by VClib on Wed Nov 14, 2012 at 08:08:23 PM PST

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site