i am reading it that way... or you will see Intel divest itself from the US and then spin off its US division into a wholly owned subsidiary, or seperate strategic alliance in which Intei sells Intel processors in the US but every where else they are known as intel... from my minor reading of it, basically Obama wants money from anywhere and everywhere... from a pair of nike shoes produced in india and sold in china, to an intel processor produced in germany and sold in finland...
i am reading it that way... or you will see Intel divest itself from the US and then spin off its US division into a wholly owned subsidiary, or seperate strategic alliance in which Intei sells Intel processors in the US but every where else they are known as intel... from my minor reading of it, basically Obama wants money from anywhere and everywhere... from a pair of nike shoes produced in india and sold in china, to an intel processor produced in germany and sold in finland...
BoberFett
Lifer
- Oct 9, 1999
- 37,562
- 9
- 81
MIKEMIKE
I thought a bit and removed that last statement, because as a wholly owned subsidiary of a US corporation, that would still count as an asset and Intel would still maintain it's value. And the laws could be written to cover that situation.
But your situation is totally possible. Shut down their US operations and set up shop elsewhere, with a US dummy corporation set up just to sell to Americans.
It does sound like Republicans and Democrats are colluding to end America's prosperity.
I thought a bit and removed that last statement, because as a wholly owned subsidiary of a US corporation, that would still count as an asset and Intel would still maintain it's value. And the laws could be written to cover that situation.
But your situation is totally possible. Shut down their US operations and set up shop elsewhere, with a US dummy corporation set up just to sell to Americans.
It does sound like Republicans and Democrats are colluding to end America's prosperity.
Changes Will 'Restore Balance' To Tax Code
" Currently, U.S. businesses may take immediate deductions on their U.S. tax returns for expenses on overseas investments, but defer paying U.S. taxes on profits from those investments. Obama characterized the practice as part of a "broken" tax code that favors companies for investing overseas as opposed to those that invest and create jobs at home.
Under the administration's proposal, companies would be barred from taking deductions on their U.S. taxes for offshore investments until they pay taxes on their offshore profits"
I dont see the problem with this loopwhole being closed. Companies would pay no taxes on their foreign income and it would be deferred unless they wish to claim Foreign investments as expences on their US liabilities.
Currently they are allowed to Defer Taxes AND claim the expendtures as a Expence against US tax liabilities.
that's why i threw out the strategic alliance... now note, since i believe most of Intel's Fabs are in foreign countries, yet it is a US corporation, they would be hit extremely hard by this... The paper seems to say that since Intel would be using the profits made by selling a german built processor in germany, to upgrade their german facility, and then use that expense to deduct in american taxes for an offshore improvement, they would be taxed in the US... instead, why dont we just say, foreign profits, and investments can not be used to deduct in the US... i dont know other countries tax rules regarding this, but the solution to closing tax loopholes is not to tax more...
Fern and GenX are getting ridiculous - Obama could say he's going to wipe out all the hunger on this planet, and you would be bitching that he's not letting the natural selection process take place.
There are 18 THOUSAND companies registered to one address in the Cayman Islands - do you think it's a really, really big building with lots of companies in it, or do you think there are some - gasp - tax benefits by using that 'offshore' address.
Your whole example about falling prices borders on idiocy - yes, a new computer today can be had for $300, but if you want a top of the line, brand new computer, you are still going to pay a premium for it. The only thing that has changed in that pricing stream is that there is a much wider variety of products and performance now. The same is true with TV's and large home appliances.
We now live in a global market, period - it has nothing to do with US companies making items in other places - it's about companies all over the world making products and being in competition on a global scale.
There are 18 THOUSAND companies registered to one address in the Cayman Islands - do you think it's a really, really big building with lots of companies in it, or do you think there are some - gasp - tax benefits by using that 'offshore' address.
Your whole example about falling prices borders on idiocy - yes, a new computer today can be had for $300, but if you want a top of the line, brand new computer, you are still going to pay a premium for it. The only thing that has changed in that pricing stream is that there is a much wider variety of products and performance now. The same is true with TV's and large home appliances.
We now live in a global market, period - it has nothing to do with US companies making items in other places - it's about companies all over the world making products and being in competition on a global scale.
BoomerD
No Lifer
- Feb 26, 2006
- 66,365
- 14,770
- 146
I see all of that as a very good thing.
Also looks very good to me.
While I agree that profits earned in a foreign country shouldn't be taxed in the US, I do see anything that sends US jobs to foreign countries as a bad thing...and companies need to be hit financially for every US job they offshore.
Seems perfectly reasonable to me. If they aren't required to pay taxes on those foreign profits, why should they be able to deduct their expenses for such foreign operations?
Pro-business people always talk about "level playing field," but instead of raising the standards in other countries, they always want the US to lower ours.
Correct me if im wrong, But aren't those foreign taxes still going to be deferred unless the corporation wishes to deduct their foreingn expenses from their domestic tax liabilities?
frostedflakes
Diamond Member
- Mar 1, 2005
- 7,925
- 1
- 81
I'm kind of on the fence on this. Unfortunately it will hurt large corporations, but it's hard for me to feel sorry for them when the government is closing loopholes that shouldn't even exist. Foreign tax deferral (at least in its current form) was a mistake.
http://www.bloomberg.com/apps/...9jSNVDYXQoE&refer=home
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
- 106
Yes, we are in global competition and thanks for proving you didn't understand my post or understand much, if anything, about global competition.
Only the US companies competing in foreign markets will be subject to US taxation. And like all the other companies competing there they will also be subject to tax from that foreign country.
If you don't understand how one group being subject to aditional taxes that the others aren't doesn't translate into a competetive diadvantage you're beyond hopeless/helpless.
See "level playing field' in my post you (lamely attempt to) criticize.
Fern
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
- 106
It's far far more complicated than any of these articles can hope to convey.
Decades ago we passed sub-part F of the internal revenue code to eliminate any loophole whereby a US company could operate foreign incorporated subsidiares with any kind of real tax advantage.
So, there has been no real advantage to foreign subs for US tax purposes. I do recall some changes to sub-part that would defer tax on some foreign profits as long they continued to be used in foreign operations (i.e., not repatriated). Otherwise, foreign business by US companies conducted through foreign subsidiares was at a competeitive disadvantage to other foreign corporations. This has not changed.
-----------------
This article is full of sh!t.
They are mixing apples and oranges.
On the one hand, foreign subsidiaires are foreign corporations and as such the US has no juridiction over them. They do not file US tax returns. Why should they, no other foriegn corporations must, we cannot make foreign companies file US tax return unles they operate here.
And after the rule change I mentioned above, the US (corporation that is a) stockholder can (under certain circumstances) defer recognizing the foreign profits (owned by the foreign company) unil they are paid to the (US corporate parent company) shareholder. (This is the same model as US people owning stock in companies, until the company declares and pays a dividend there is no tax to the stockholder).
Now, a US company cannot take deductions on it's US tax return for expenses of it's foriegn incorporated subsidiary (as this article would have you to believe).
To conflate the deferral of taxation on foreign profits not yet received with deductions on foriegn investments is dishonest and wrong.
On the other hand:
If you operate your foreign business or investment without a foreign incorporated subsidiary you will be subject to tax immediately on all foriegn sourced profits (no need to repatriate or pay out to US company), and you will get an immediate deduction (likewise) for your expenses in trying to get make a profit from such foreign operations (be they investment or otherwise). This is as it should be and is completely intuitive.
Again, the artcle (and much of what I read in this thread) is BS based upon a lack of understanding of international tax law. Members of Congress are even worse though, perhaps you can take some comfort in that ( I don't).
I'll retract or modify my remarks if someone can demonstrate/prove that income from a foreign incorporated subsidiary can be deferred while at the same time expenses paid by the US parent company for the foreign sub can be deducted for US tax purposes (as the article says).
Fern
The best thing that could happen to this country is to recuperate all the lost revenue from shelters, heavens and loopholes that have been established by and only for the benefit those corporations that lobbied and donated beaucoup bucks to congress (both isles).
This is real leadership. If someone already rigged the laws (and the system) for corrupt purposes--you change the law.
Country first, last and always. Pay your taxes or get the F. out of my country.
This is real leadership. If someone already rigged the laws (and the system) for corrupt purposes--you change the law.
Country first, last and always. Pay your taxes or get the F. out of my country.
XZeroII
Lifer
- Jun 30, 2001
- 12,572
- 0
- 0
I have a question for everyone. Where is the money going to come from to pay for all of these extra taxes? Right now, corporate earnings are still VERY low and the outlook is still not good. So if a company is losing money right now, and then they are expected to pay more taxes, where will the money come from?
I think that this would be an excellent thing to do during a good economy. However, proposing something like this in the midst of the worst recession in a long time is foolish. You can't tax your way out of a recession. This applies to businesses as well as individuals.
I think that this would be an excellent thing to do during a good economy. However, proposing something like this in the midst of the worst recession in a long time is foolish. You can't tax your way out of a recession. This applies to businesses as well as individuals.
anyways, so i think it is pretty dumb that companies can receive a tax deduction in the us for investments abroad and then not pay taxes on the returns from that investment. I think they should fix the deduction, not the taxes, however. I don't see what this woudl do, its not like people are going to close their plants, they will still pay the same in taxes on their american operations.
And isn't that the point? Economies of scale are what power the producers. Why punish the producers by double taxing them and that which they produce?
This is quite possibly the most stupid thing I've ever heard from the Obama administration.
The idea of taxing profits on money made abroad is nothing short of idiocy and will only lead to US companies incorporating into the Bahamas or Cayman islands.
Yes, the "tax deduction" loophole should be closed.
No, an individual or corporation should never have to pay taxes on money earned from abroad.
Get rid of the stupid deduction, and stop the tax on foreign profits.
The idea of taxing profits on money made abroad is nothing short of idiocy and will only lead to US companies incorporating into the Bahamas or Cayman islands.
Yes, the "tax deduction" loophole should be closed.
No, an individual or corporation should never have to pay taxes on money earned from abroad.
Get rid of the stupid deduction, and stop the tax on foreign profits.
Michael
Elite member
- Nov 19, 1999
- 5,435
- 234
- 106
I have been looking and looking for the "deduction" USA companies get to deduct and yet not pay taxes on foreign income. The closest I saw in a news story is the idea that someone on NYC provides admin support to an overseas office and that expense is deducted and the overseas income is not taxed.
That actually is not allowed under the current tax laws and if it were found in a tax audit the company would be required to charge the foreign entity for the USA services plus a reasonable mark-up.
This looks like nothing but a tax increase wrapped around the political cover of "fairness" when it simply is a lie. The simple fact is that US tax rates are high and the US taxes you even if you make the money outside the USA. This puts US companies at such a huge disadvantage that the deferal of taxes was brought in ages ago.
The R&D tax break that he is offering in return is also a joke. That has been around forever. There is no political will to allow that credit to expire. So it is an empty promise.
Michael
That actually is not allowed under the current tax laws and if it were found in a tax audit the company would be required to charge the foreign entity for the USA services plus a reasonable mark-up.
This looks like nothing but a tax increase wrapped around the political cover of "fairness" when it simply is a lie. The simple fact is that US tax rates are high and the US taxes you even if you make the money outside the USA. This puts US companies at such a huge disadvantage that the deferal of taxes was brought in ages ago.
The R&D tax break that he is offering in return is also a joke. That has been around forever. There is no political will to allow that credit to expire. So it is an empty promise.
Michael
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