It's Time to Lower Corporate Taxes

[Toro]

America is uncompetitive from a tax standpoint. We have the highest corporate tax rate in the world. American companies are choosing to relocate abroad because we have become so uncompetitive.

Note in this article that Bill Clinton's former Chair of the Council of Economic Advisers agrees, and we are getting beaten on deals by companies in France. France! Rather than the President mealy-mouth companies about being unpatriotic, he and Congress have to get off their butts and do something about it.

Time to lower corporate taxes. I say to 15%. And get rid of all these ridiculous loopholes.

The U.S. has the highest corporate income-tax rate in the developed world. While U.S. corporations face a combined federal-state statutory tax rate of 39.1%, our competitors in the Organization for Economic Cooperation and Development (OECD) face an average rate of 25%.

According to Laura Tyson, former chairwoman of President Clinton's Council of Economic Advisers, "America's relatively high rate encourages U.S. companies to locate their investment, production, and employment in foreign countries, and discourages foreign companies from locating in the U.S., which means slower growth, fewer jobs, smaller productivity gains, and lower real wages." ...

At the same time, the U.S. adheres to a system of international taxation discarded by most other countries. American businesses are taxed on a world-wide basis regardless of where in the world revenue is earned. That means U.S. multinationals pay taxes twice, first to the foreign country in which they do business and then to the U.S. after they repatriate their profits. ...

As with the relatively high corporate tax rate, America's world-wide system of taxation hinders growth, encourages companies to relocate outside of the U.S., makes U.S.-based companies vulnerable to foreign takeover, and puts American businesses at a competitive disadvantage internationally.

At Emerson, the St. Louis-based manufacturing and technology company where I retired last year as vice chairman, the business has seen and experienced the deleterious effects of the U.S. tax code firsthand. Here is one example:

In 2006, Emerson sought to acquire a company called American Power Conversion (APC). This was a Rhode Island-based company that made more than half of its earnings outside the U.S. Unfortunately, Emerson competed against Schneider Electric, SU.FR +0.49% a French company, to acquire APC. Emerson offered more than $5 billion, but ultimately Schneider acquired APC by offering a bid in excess of $6 billion.

Why was Schneider willing to offer more? Schneider outbid us because France's tax code—typical of most OECD countries—exempts 95% of foreign-source income from taxation, while the U.S. tax code fully taxes such income. APC's profits were worth more to Schneider because, once absorbed, APC's global profits (net of the taxes paid in the countries where those profits were earned) could be repatriated to Schneider's headquarters in France, where they would be taxed at less than 2%.

In contrast, earnings repatriated to the U.S. are subject to a tax rate of nearly 40%, with a credit for taxes paid abroad on that income.

Walter Galvin: Why Corporate Inversions Are All the Rage - WSJ

 

[Kimura]

America is uncompetitive from a tax standpoint. We have the highest corporate tax rate in the world. American companies are choosing to relocate abroad because we have become so uncompetitive.

Note in this article that Bill Clinton's former Chair of the Council of Economic Advisers agrees, and we are getting beaten on deals by companies in France. France! Rather than the President mealy-mouth companies about being unpatriotic, he and Congress have to get off their butts and do something about it.

Time to lower corporate taxes. I say to 15%. And get rid of all these ridiculous loopholes.

The U.S. has the highest corporate income-tax rate in the developed world. While U.S. corporations face a combined federal-state statutory tax rate of 39.1%, our competitors in the Organization for Economic Cooperation and Development (OECD) face an average rate of 25%.

According to Laura Tyson, former chairwoman of President Clinton's Council of Economic Advisers, "America's relatively high rate encourages U.S. companies to locate their investment, production, and employment in foreign countries, and discourages foreign companies from locating in the U.S., which means slower growth, fewer jobs, smaller productivity gains, and lower real wages." ...

At the same time, the U.S. adheres to a system of international taxation discarded by most other countries. American businesses are taxed on a world-wide basis regardless of where in the world revenue is earned. That means U.S. multinationals pay taxes twice, first to the foreign country in which they do business and then to the U.S. after they repatriate their profits. ...

As with the relatively high corporate tax rate, America's world-wide system of taxation hinders growth, encourages companies to relocate outside of the U.S., makes U.S.-based companies vulnerable to foreign takeover, and puts American businesses at a competitive disadvantage internationally.

At Emerson, the St. Louis-based manufacturing and technology company where I retired last year as vice chairman, the business has seen and experienced the deleterious effects of the U.S. tax code firsthand. Here is one example:

In 2006, Emerson sought to acquire a company called American Power Conversion (APC). This was a Rhode Island-based company that made more than half of its earnings outside the U.S. Unfortunately, Emerson competed against Schneider Electric, SU.FR +0.49% a French company, to acquire APC. Emerson offered more than $5 billion, but ultimately Schneider acquired APC by offering a bid in excess of $6 billion.

Why was Schneider willing to offer more? Schneider outbid us because France's tax code—typical of most OECD countries—exempts 95% of foreign-source income from taxation, while the U.S. tax code fully taxes such income. APC's profits were worth more to Schneider because, once absorbed, APC's global profits (net of the taxes paid in the countries where those profits were earned) could be repatriated to Schneider's headquarters in France, where they would be taxed at less than 2%.

In contrast, earnings repatriated to the U.S. are subject to a tax rate of nearly 40%, with a credit for taxes paid abroad on that income.

Walter Galvin: Why Corporate Inversions Are All the Rage - WSJ

Our nominal corporate tax rate is around 35%, but it's a pointless number compared to the effective tax rate. Corporate taxes account for around 1.3% of GDP, while most other industrialized countries are at 2.5% of GDP. FYI, the GAO found that 55% of US companies paid ZERO federal income taxes during at least one year over a seven-year period. This was back 2008 if I recall. With that being said, I have no problems closing loopholes and getting rid of useless parts of the tax code.

A single-payer health care system would make US companies more competitive. As long as health care is a marginal cost of production, it's going to be difficult to compete with Germany, South Korea, France, Japan, etc.

 

[EdwardBaiamonte]

Our nominal corporate tax rate is around 35%, but it's a pointless number compared to the effective tax rate.

1) to get the effective rate you often have to move out of the country.

2) we have the tax only to appeal to the pure ignorance of Marxist liberals who don't understand that a tax cost like any cost is passed on in the form of higher prices.

 

[Rshermr]

Our nominal corporate tax rate is around 35%, but it's a pointless number compared to the effective tax rate.

1) to get the effective rate you often have to move out of the country.

2) we have the tax only to appeal to the pure ignorance of Marxist liberals who don't understand that a tax cost like any cost is passed on in the form of higher prices.

jesus. Poor ed. Thinks that you may need to move out of the country to get "the effective tax rate". Poor ignorant tool. Does not understand that EVERYONE who pays taxes pays an effective rate.

 

[Mad Scientist]

Toro, according to this article Boeings' Tax rate since 2004 has hit a maximum of 4.6%.

The 16 Profitable Companies That Pay Almost Nothing In Taxes - Business Insider

What do you think it should be lowered to?

 

[boedicca]

Agreed that we should lower the tax rate. We should also stop taxing foreign sourced profits and get rid of subsidies and preferences in the tax code - include transfer payments to individuals.

 

[EdwardBaiamonte]

Toro, according to this article Boeings' Tax rate since 2004 has hit a maximum of 4.6%.

The 16 Profitable Companies That Pay Almost Nothing In Taxes - Business Insider

What do you think it should be lowered to?

should be lowered to 0% since:
1) customers pay it in the form of higher prices anyway so it is duplicative

2) free of the tax our industries would be more competitive

3) free of the tax our industries could focus on business rather than tax avoidance making them even more competitive. GE for example has 1000 full time tax professionals. What a total waste of resources just to pander to the pure ignorance of liberals who need to punish business.

 

[Toro]

Our nominal corporate tax rate is around 35%, but it's a pointless number compared to the effective tax rate. Corporate taxes account for around 1.3% of GDP, while most other industrialized countries are at 2.5% of GDP. FYI, the GAO found that 55% of US companies paid ZERO federal income taxes during at least one year over a seven-year period. This was back 2008 if I recall. With that being said, I have no problems closing loopholes and getting rid of useless parts of the tax code.

The "effective" tax rate is the "average" effective tax rate. Many companies pay much higher than than the effective rate, which is somewhere between 12% and 23%, depending which study one uses.

The reason why we have a lower effective tax rate is because our current tax rates and system incentivizes companies to go offshore. Lower it to 15% - while getting rid of the bullshit loopholes - and you'll see a lot of the offshoring stop. Companies aren't inverting for the hell of it. They are doing so because it makes perfect economic sense.

The American corporate tax system is one of the most uncompetitive tax systems in the world. Closing loopholes without lowering tax rates will just accelerate companies leaving.

As for healthcare, as a Canadian living in Canada while corporate taxes were high, Canadian Medicare did exactly zero to stop companies from leaving Canada and reincorporating elsewhere in the 1990s. It was the Liberal government which began cutting corporate taxes in Canada because they could see the damage it was causing to Canadian business.

 

[Toro]

Toro, according to this article Boeings' Tax rate since 2004 has hit a maximum of 4.6%.

The 16 Profitable Companies That Pay Almost Nothing In Taxes - Business Insider

What do you think it should be lowered to?

15%, but I'm open to between 10% and 20%.

 

[Mad Scientist]

Toro, according to this article Boeings' Tax rate since 2004 has hit a maximum of 4.6%.

The 16 Profitable Companies That Pay Almost Nothing In Taxes - Business Insider

What do you think it should be lowered to?

15%, but I'm open to between 10% and 20%.

That's 4 POINT 6 Percent not 46.

Boeing paid only 4.6 percent MAXIMUM since 2004.

 

[Mad Scientist]

2) free of the tax our industries would be more competitive.

Could I also add:
"free of the tax our People would be more Free".

It's fine that Boeing pays 4.6% Tax if I can have that rate too!

 

[EdwardBaiamonte]

2) free of the tax our industries would be more competitive.

Could I also add:
"free of the tax our People would be more Free".

It's fine that Boeing pays 4.6% Tax if I can have that rate too!

but you do in effect!! The less they pay in taxes the less their airplanes cost and the cheaper it is for you to fly!

 

[Toro]

Toro, according to this article Boeings' Tax rate since 2004 has hit a maximum of 4.6%.

The 16 Profitable Companies That Pay Almost Nothing In Taxes - Business Insider

What do you think it should be lowered to?

15%, but I'm open to between 10% and 20%.

That's 4 POINT 6 Percent not 46.

Boeing paid only 4.6 percent MAXIMUM since 2004.

Yes, I know. I read it. Something like a third of large corporations paid no taxes at all for much of the 00s.

 

[Mad Scientist]

15%, but I'm open to between 10% and 20%.

That's 4 POINT 6 Percent not 46.

Boeing paid only 4.6 percent MAXIMUM since 2004.

Yes, I know. I read it. Something like a third of large corporations paid no taxes at all for much of the 00s.

You want lower Corporate Taxes but you also want to raise Boeings' Taxes?

What am I missing here?

 

[Zander]

It's not enough. We need to restructure our entire tax code. Move to a flat or near flat rate with very few (if any) deductions for business and for individuals/families. Under this system Filing taxes would be as simple as ordering from Amazon.

 

[TakeAStepBack]

I'd rather see individual income tax brought down to around 0%.

 

[Toro]

That's 4 POINT 6 Percent not 46.

Boeing paid only 4.6 percent MAXIMUM since 2004.

Yes, I know. I read it. Something like a third of large corporations paid no taxes at all for much of the 00s.

You want lower Corporate Taxes but you also want to raise Boeings' Taxes?

What am I missing here?

The first question I would ask is if the 4.6% income tax paid include taxes paid to foreign governments? If it does not, it's a bogus number. But admittedly, I don't know if it does or not.

The United States is the only country that I am aware of which taxes income on foreign earnings, even if the transaction had nothing to do with the United States. If Exxon drills for oil in Africa then sells it to Europe, that income should not be subject to US tax. That should be eliminated.

Some of the tax gimmicks which shield income, however, should be eliminated. For example, intra-company transfer of technology offshore at so-called market values is a joke and should be stopped.

 

[Toro]

http://www.usmessageboard.com/economy/196277-the-us-corporate-tax-code-is-ridiculous.html

 

[EdwardBaiamonte]

It's not enough. We need to restructure our entire tax code. Move to a flat or near flat rate with very few (if any) deductions for business and for individuals/families. Under this system Filing taxes would be as simple as ordering from Amazon.

yes and whole lib commie make work industries would be eliminated: IRS, tax preparers, tax lawyers, most accountants, tax software, muni bond industry, estate planning industry, life insurance, tax courts, payroll tax industry,IRA /pension industry. There must be even more! All those folks would have to get real jobs and make a real contribution to society rather than leech off it.

 

[Toro]

http://www.usmessageboard.com/economy/178090-tax-cuts-create-jobs.html