It's Time to Lower Corporate Taxes

[EdwardBaiamonte]

The US has the third lowest corporate tax burden in the world

yes and at 40% the highest tax rate in the world which of course causes many to move out to avoid it. When Ireland dropped to 12% half the world moved there. Its no mystery!

 

[EdwardBaiamonte]

Your bet is that lower taxes would make them invest more in America ... sounds nice in theory. I say it's a wild bet, because there are other forces at play.

dear, there are still millions of corporations here with some moving out all the time
.Common sense will tell you that if they can go to Ireland to pay a 12% tax or stay here and pay a 40% tax that is more incentive to move out not to stay in. Do you understand now? Do you think its coincidence that when Ireland dropped to 12% everyone moved there?

Everyone ? Links , references, figures? How big was the move ? how many Irish employments were created?

dear you can do your own homework if you doubt the obvious Irish experience!

 

[CultureCitizen]

The US has the third lowest corporate tax burden in the world

yes and at 40% the highest tax rate in the world which of course causes many to move out to avoid it. When Ireland dropped to 12% half the world moved there. Its no mystery!

You do seem totally unable to produce a link to support your points of view.
If your theory was completely correct al tax havens would be first world countries.
They are not.
No amount of corporate profit is good if it doesn't translate into investment, and in turn such investments create jobs.

A fair amount of corporate gains has been triggered by earnings at offshore locations ( computers produced cheaply at China and sold with great margin in the US for example).

It is absolutely desireable that such earnings are invested in America, but I certainly don't believe that slashing the corporate taxes would do the trick. What else are tax havens for if not for the noble purpose of stashing trillions at zero tax deduction?

 

[CultureCitizen]

dear, there are still millions of corporations here with some moving out all the time
.Common sense will tell you that if they can go to Ireland to pay a 12% tax or stay here and pay a 40% tax that is more incentive to move out not to stay in. Do you understand now? Do you think its coincidence that when Ireland dropped to 12% everyone moved there?

Everyone ? Links , references, figures? How big was the move ? how many Irish employments were created?

dear you can do your own homework if you doubt the obvious Irish experience!

Ok Ed: I am absolutely unimpressed by the effect the aforementioned tax cuts have had one Ireland's GDP.

ireland gdp - Wolfram|Alpha

Ireland GDP | Actual Value | Historical Data | Forecast | Calendar

 

[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.

The US has the third lowest corporate tax burden in the world right behind France and zee Germans. The global average is 2.8%

In other countries, many small firms pay personal income and corporate tax. In essence, despite what our friends at CATO and the Heritage Foundation tell us, business owners in many of these countries with a lower tax rate may ending paying more $$$$ than their US counterparts. The US has another advantage than other countries with lower tax rates: we don't get hit with a VAT, a super regressive and douchy tax, on the same level as FICA.

The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. That's the point. Lower it and that ends.

In terms of health care, for example, Canadian firms don't have to worry about health care being a marginal cost of production. That was my point, not whether or not Canadians firms may choose to relocate south of the border or elsewhere.

I've heard that argument from the Left my whole life. The cost of healthcare is built into higher nominal wages. Canada is a higher cost country.

American firms are not moving to Canada - or inverting to the UK, Switzerland or Ireland for that matter - because of healthcare. They're going for lower taxes and the ability to access cash that is trapped overseas by, you guessed it, taxes!

 

[Dad2three]

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.

And regressive

a guy who earns 1 millin pays 150K while a guy who earns 25k pays $3750.

So it takes the poor guy an entire life time to contribute what the rich guy contributes in one year!! Is that fair?

"And regressive"

 

[Dad2three]

The US has the third lowest corporate tax burden in the world

yes and at 40% the highest tax rate in the world which of course causes many to move out to avoid it. When Ireland dropped to 12% half the world moved there. Its no mystery!

ONCE MORE FOR THE RETARD

35 percent federal rate on Corps is the STATUARY rate

The U.S. statutory tax rate of 35 percent is almost entirely irrelevant. The effective corporate tax rate (what corporations actually pay as a percentage of their profits) is what matters, and it’s far lower than the statutory corporate tax rate because of the loopholes that allow corporations to avoid taxes.


While the statutory corporate income tax rate for the U.S. may be high compared to those of other countries, the total federal corporate income tax collected in the U.S. in 2010 was equal to just 1.3 percent of our gross domestic product — in other words, 1.3 percent of our total economic output — according to the Treasury Department. The figure is 1.6 percent of GDP when state corporate income taxes are included.[3]

Data from the Organizations for Economic Cooperation and Development (OECD) show that the OECD countries other than the U.S. collected corporate tax revenue equal to 2.8 percent of their combined GDPs in 2010. This is another way of saying that the weighted average of corporate tax collected as a percentage of GDP for the countries that are the U.S.’s main trading partners and competitors was 2.8 percent in 2010.


Bernie Sanders Is Right and the Tax Foundation Is Wrong: The U.S. Has Very Low Corporate Income Taxes | CTJReports

 

[Dad2three]

dear, there are still millions of corporations here with some moving out all the time
.Common sense will tell you that if they can go to Ireland to pay a 12% tax or stay here and pay a 40% tax that is more incentive to move out not to stay in. Do you understand now? Do you think its coincidence that when Ireland dropped to 12% everyone moved there?

Everyone ? Links , references, figures? How big was the move ? how many Irish employments were created?

dear you can do your own homework if you doubt the obvious Irish experience!

Got it,. AGAIN you can't back up your bullshit!

 

[Dad2three]

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.

The US has the third lowest corporate tax burden in the world right behind France and zee Germans. The global average is 2.8%

In other countries, many small firms pay personal income and corporate tax. In essence, despite what our friends at CATO and the Heritage Foundation tell us, business owners in many of these countries with a lower tax rate may ending paying more $$$$ than their US counterparts. The US has another advantage than other countries with lower tax rates: we don't get hit with a VAT, a super regressive and douchy tax, on the same level as FICA.

The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. That's the point. Lower it and that ends.

In terms of health care, for example, Canadian firms don't have to worry about health care being a marginal cost of production. That was my point, not whether or not Canadians firms may choose to relocate south of the border or elsewhere.

I've heard that argument from the Left my whole life. The cost of healthcare is built into higher nominal wages. Canada is a higher cost country.

American firms are not moving to Canada - or inverting to the UK, Switzerland or Ireland for that matter - because of healthcare. They're going for lower taxes and the ability to access cash that is trapped overseas by, you guessed it, taxes!

"The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. "

lol

Don't know the 12% EFFECTIVE tax burden is on US profits. I'm shocked

Let them invert AND keep them out of the largest economy in the world simple really, oh right the GOP REFUSES to fix ANY problems. Wait till we get those MF GOPers out then fix those Corp tax dodgers!

 

[Rshermr]

The US has the third lowest corporate tax burden in the world right behind France and zee Germans. The global average is 2.8%

In other countries, many small firms pay personal income and corporate tax. In essence, despite what our friends at CATO and the Heritage Foundation tell us, business owners in many of these countries with a lower tax rate may ending paying more $$$$ than their US counterparts. The US has another advantage than other countries with lower tax rates: we don't get hit with a VAT, a super regressive and douchy tax, on the same level as FICA.

The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. That's the point. Lower it and that ends.

In terms of health care, for example, Canadian firms don't have to worry about health care being a marginal cost of production. That was my point, not whether or not Canadians firms may choose to relocate south of the border or elsewhere.

I've heard that argument from the Left my whole life. The cost of healthcare is built into higher nominal wages. Canada is a higher cost country.

American firms are not moving to Canada - or inverting to the UK, Switzerland or Ireland for that matter - because of healthcare. They're going for lower taxes and the ability to access cash that is trapped overseas by, you guessed it, taxes!

"The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. "

lol

Don't know the 12% EFFECTIVE tax burden is on US profits. I'm shocked

Let them invert AND keep them out of the largest economy in the world simple really, oh right the GOP REFUSES to fix ANY problems. Wait till we get those MF GOPers out then fix those Corp tax dodgers!

The issue of companies moving operations to low cost countries is nothing new. It is simply an issue that cons like Toro spend a lot of time on, because it is a subject pushed by every bat shit crazy con web site out there. But corporations moving has little to do with tax rates. Here is a wsj quote on the number of companies moving to other countries partially because of taxes:

Since 2009, at least 10 U.S. public companies have moved their incorporation address abroad or announced plans to do so, including six in the last year or so, according to a Wall Street Journal analysis of company filings and statements. That's up from just a handful from 2004 through 2008.

The companies that have moved recently include manufacturer Eaton Corp. ETN -0.93% , oil firms Ensco International Inc. ESV -1.41% and Rowan RDC -0.96% Cos., as well as a spinoff of Sara Lee Corp. called D.E. Master Blenders 1753.
U.S. Firms Move Abroad to Cut Taxes - WSJ

Uh, that IS just a handfull. That is 10 corporations in 5 years. THAT IS 2 CORPORATIONS PER YEAR

Uh, there are over 18 MILLION CORPORATIONS IN THE us. So, 10 of 18 MILLION. Jesus. Sounds like a major problem to me. And look at those corporate names that have moved. Real heavy weights in the minds of conservatives, but the rational world really is not concerned.

What is normal, of course, is that companies have always moved to countries with low production costs. Particularly, they have moved to where wages are lowest. Japan, like crazy, in the 60's. And what happened??? Wages went way up, and production by us companies moved to the next low cost country. Now India and China. And wages are moving UP. Where next???

So, maybe we should require wages to decrease in the US. To poverty levels. Like in China, or India. Just to make the corporations happy. To hell with the middle class. AND, let's pretend that Germany does not exist. Nor Sweden. Nor Norway. All countries with high tax rates and good wage rates for their work forces. Lets just move the tax burden to the middle class again, ignore the fact that two thirds of US companies PAY NO TAXES AT ALL and use accounting tricks to move profits to overseas divisions by shifting costs from where they belong.
Or, we could say move away if you want, but forget about selling in the US. If you want to move to avoid paying taxes, you certainly do not need the US marketplace. Fair enough??

 

[Ravi]

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.

The US has the third lowest corporate tax burden in the world right behind France and zee Germans. The global average is 2.8%

In other countries, many small firms pay personal income and corporate tax. In essence, despite what our friends at CATO and the Heritage Foundation tell us, business owners in many of these countries with a lower tax rate may ending paying more $$$$ than their US counterparts. The US has another advantage than other countries with lower tax rates: we don't get hit with a VAT, a super regressive and douchy tax, on the same level as FICA.

The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. That's the point. Lower it and that ends.

In terms of health care, for example, Canadian firms don't have to worry about health care being a marginal cost of production. That was my point, not whether or not Canadians firms may choose to relocate south of the border or elsewhere.

I've heard that argument from the Left my whole life. The cost of healthcare is built into higher nominal wages. Canada is a higher cost country.

American firms are not moving to Canada - or inverting to the UK, Switzerland or Ireland for that matter - because of healthcare. They're going for lower taxes and the ability to access cash that is trapped overseas by, you guessed it, taxes!

Taxes are just a small part of it. Labor costs are king.

Chinese labor costs have skyrocketed at a double-digit pace;
Volatility in world oil markets has driven up production costs;
Political instability and environmental catastrophes – ranging from the Arab Spring to the Japanese earthquake and tsunami – demonstrated how vulnerable an Asian-based supply chain can be to external factors;
Severe time-zone discrepancies stymied communication between U.S.-based managers and their Asian production facilities;
Reduced value of the U.S. dollar has eliminated many of the cost advantages of manufacturing in low-cost countries; and
Difficulty in monitoring quality control and protecting company intellectual property and assets.

Manufacturing Today - Near-Shoring Takes Hold

 

[hazlnut]

Corps don't pay taxes if they have a good accountant.

 

[Kimura]

The US has a low corporate tax burden in large part because American corporations are shifting overseas because of the high corporate tax rate. That's the point. Lower it and that ends.

Offshore corporate income is treated differently. US multinationals shift around $2 trillion to their offshore subsidiaries, so they can avoid paying corporate income tax. US corporations are sitting on 10 trillion cash, they don't need anymore tax breaks.

I've heard that argument from the Left my whole life. The cost of healthcare is built into higher nominal wages. Canada is a higher cost country.

And? The same can be said of Germany, South Korea, Italy, France and Japan, yet all these countries have highly competitive firms and exports. Most of the their autoworkers, for example, earn higher nominal wages.

We both know that health care costs are squeezing wage growth in the US. The dollars that should go into wage increases have been diverted to the ever-increasing cost of employer-provided health care schemes.

American firms are not moving to Canada - or inverting to the UK, Switzerland or Ireland for that matter - because of healthcare. They're going for lower taxes and the ability to access cash that is trapped overseas by, you guessed it, taxes!

They go there to simply avoid paying taxes on their earnings, especially places like Ireland, Luxembourg and Switzerland. Ever hear of a Double Irish with a Dutch sandwich?

 

[Toro]

Offshore corporate income is treated differently. US multinationals shift around $2 trillion to their offshore subsidiaries, so they can avoid paying corporate income tax. US corporations are sitting on 10 trillion cash, they don't need anymore tax breaks.

Offshore cash is taxed as US marginal rates once it is repatriated. That's why it's sitting offshore. The United States is the only country which taxes offshore income that I'm aware of. A Canadian, Dutch, Swiss or Irish company can bring that cash back home without it being taxed. An American company cannot. So American companies are reincorporating offshore. We are losing that anyways, and we will continue to do so. Lower the tax rate to 15% and it will stop.

I've heard that argument from the Left my whole life. The cost of healthcare is built into higher nominal wages. Canada is a higher cost country.

And? ...

You brought up the issue of healthcare as a marginal competitive advantage in a discussion about taxes, so I assumed that you did so to rebut the notion companies are leaving because of high American taxes. Can you point to any company that has left the United States because of healthcare costs? Healthcare costs certainly weren't the reason why Canadian companies were reincorporating in the US in the 1990s, which was a big deal in Canada. After the Canadian government cut corporate taxes, it stopped being a big deal in Canada.

 

[Toro]

Taxes are just a small part of it. Labor costs are king.

That's true. But taxes are still a cost. And it is driving American corporations offshore.

 

[Toro]

Since 2009, at least 10 U.S. public companies have moved their incorporation address abroad or announced plans to do so, including six in the last year or so, according to a Wall Street Journal analysis of company filings and statements. That's up from just a handful from 2004 through 2008.

It's not just their incorporation address. It's mostly shifting assets offshore. That's why the effective corporate income tax rate has been falling. The US tax code incentivizes companies to do this. So reform the tax code and lower taxes, and we reduce the incentives for companies to go offshore. The United States has the highest corporate income tax rate in the world, so it is no surprise that companies engage in activities to lower their taxes.

 

[Ravi]

Offshore cash is taxed as US marginal rates once it is repatriated. That's why it's sitting offshore. The United States is the only country which taxes offshore income that I'm aware of. A Canadian, Dutch, Swiss or Irish company can bring that cash back home without it being taxed.

I don't think that is correct. According to wikipedia:

Canadian residents and corporations pay income taxes based on their world-wide income. Canadians are protected against double taxation receiving income from certain countries which gave agreements with Canada through the foreign tax credit, which allows taxpayers to deduct from their Canadian income tax otherwise payable from the income tax paid in other countries. A citizen who is currently not a resident of Canada may petition the CRA to change her or his status so that income from outside Canada is not taxed.

 

[Ravi]

Taxes are just a small part of it. Labor costs are king.

That's true. But taxes are still a cost. And it is driving American corporations offshore.

I don't think so. That is a myth that the right has been pushing since the beginning. Corporations enjoy all kinds of loopholes. What pushes companies off shore is cheap labor and cheap raw materials.

 

[Toro]

America once went to war to escape British taxes. Now, U.S. companies are moving to the U.K. to pay them.

U.S. businesses are buying foreign companies in countries with lower tax rates so they can switch their legal home and cut their tax bills. The process, known as inversion, is the hottest trend in mergers and acquisitions, driving some of the biggest takeovers this year.

While some companies are heading to low-tax countries like Ireland and the Netherlands, Britain is emerging as the most popular landing spot because American executives are comfortable with its location, language and lifestyle. A tax break for companies filing for patents in the U.K. is another reason, particularly for pharmaceutical makers, which have been big participants in the inversion rush.

Around 20 American companies have reincorporated overseas in the past 18 months, at least in part to escape the reach of the Internal Revenue Service, according to Robert Willens, a corporate tax adviser in New York, with about eight choosing the U.K. There have been a total of about 55 inversion deals since 1994, he said.

"Right now, it's safe to say that the U.K. is the preferred country of destination for inverted companies, given the favorable tax regime and the non-tax attractions of the U.K.," said Mr. Willens, a former managing director at Lehman Brothers. ...

Britain's emergence as an inversion haven is based in part on a dramatic overhaul of the country's corporate tax code over the past five years. The coalition government of the Conservative and Liberal Democrat parties has put in place a series of cuts that will reduce the main corporate tax rate to just 20% next year from 28% in 2010, as well as measures to lower tax on income from intellectual property.

The U.S. corporate income tax rate is about 39.1%, the highest among the developed countries that form the Organization for Economic Cooperation and Development, according to that organization. ...

A company can be incorporated in the U.K. and be subject to its corporate-governance structure, which many companies find attractive. They can also choose to maintain their operational headquarters in another country where the corporate tax rate may be lower than in the U.K. and pay taxes there, provided the company's board also meets in that country. That differs significantly from the U.S.: Companies incorporated there must pay taxes, even on overseas income.

In Inversion Tax Deals, U.K. Is a Winner - WSJ

 

[Toro]

Offshore cash is taxed as US marginal rates once it is repatriated. That's why it's sitting offshore. The United States is the only country which taxes offshore income that I'm aware of. A Canadian, Dutch, Swiss or Irish company can bring that cash back home without it being taxed.

I don't think that is correct. According to wikipedia:

Canadian residents and corporations pay income taxes based on their world-wide income. Canadians are protected against double taxation receiving income from certain countries which gave agreements with Canada through the foreign tax credit, which allows taxpayers to deduct from their Canadian income tax otherwise payable from the income tax paid in other countries. A citizen who is currently not a resident of Canada may petition the CRA to change her or his status so that income from outside Canada is not taxed.

Deductions which are not available to Americans.

For example, when I moved from Canada, I stopped paying or even filing Canadian income taxes even though I was still a Canadian. Now that I am an American, I have to pay and file to the IRS even if I leave the United States forever.

Canadian corporations can credit taxes paid on foreign income tax in ways that American companies cannot, I understand.