Comments on: Business Community Upset by Obama’s New Tax Proposal

By: Totte

Totte — Tue, 23 Mar 2010 03:07:02 +0000

Im interested on your argument but I dont seem to understand the situations. But in either, what could be the possible effects of those american companies instituted in various places of the world? Im referring to the most common business which is spreading now in the Philippines which as you mention call centers or BPO’s.

By: Tully

Tully — Thu, 07 May 2009 17:09:07 +0000

Memorize the words “capital flight.”

This will not raise even remotely the amount of tax revenue claimed. It will however encourage American companies to relocate overseas to get away from some of the highest corporate tax rates in the developed world. Guess how that will affect jobs?

By: rob

rob — Thu, 07 May 2009 16:00:39 +0000

That seems reasonable.

By: cy

cy — Thu, 07 May 2009 12:36:04 +0000

I just want to throw something out there, as I haven’t heard anyone broach this idea, and I figure there must be some obvious flaw with it that I’m not seeing.

Business income tax should work like sales/use tax.

Businesses should pay the local rate OR the US rate, whichever is higher. (If the local rate is higher, pay that. If the local rate is lower, pay that *and* the delta between the local rate and the US rate)

I live in Virginia, where the sales tax rate is 5%. If I go to Delaware (sales tax: 0%) and buy a car, I pay DE nothing… but I pay VA the 5% I would’ve paid if I’d bought it there. If I tried the same thing in Tennessee (TN: 7%), I don’t pay anything more to VA (nor do I get 2% back, sadly.)

Say GM sells a car here, and the tax on profit is, say, 25% (I don’t actually know what the number is). If they go to Italy and sell a car and the tax there is, say, 35%, they don’t pay the US a dime. Any cars they sell in Bermuda, though, where the sales tax is 0%, they pay the US what they would’ve paid had they sold the car here in the states.

Am I oversimplifying?

By: John Burke

John Burke — Thu, 07 May 2009 07:00:15 +0000

A simple and contempory example of why the Chamber is right about this is this:

If the Chrysler-Fiat merger becomes operational and by virtue of its investment in the US company, Fiat makes money in the US (which it will do mainly by selling Fiats and Jeeps, if at all), it will pay US taxes on that money but pay no taxes in Italy on the same money.

If however, GM is rescued from oblivion, continues to run its profitable businesses selling cars overseas, one of which is Opel, a brand that sells well in Europe, any money that GM makes on its European Opels (and other car sales there) will be taxed by Germany, Italy, etc. and then taxed again by the U.S.

This has nothing to do with keeping business from “sending jobs overseas” like call centers and what not. Its main effect will be to hamper US companies ability to compete in Europe, China and elsewhere.

The problem of “exported jobs” is mostly a trade issue. If we want to keep jobs making textiles, apparel, steel or consumer electronics in the US, we need to slow the importation of these products from abroad by erecting tariffs or other barriers. Obama’s tax plan won’t save these jobs. Whether it’s a good idea to curb imports is a harder question — one that Obama is as lwary of dealing with as any of his predecessors, Republicans and Democrats alike.