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Obama Opens Bidding on Corporate Taxes

mbig

mbig

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A very constructive move I think.
Fair point for starting numbers.
Though I think he may have to go even lower to get the $2 Trillion hoard. Perhaps 8%-10%.
We'll see.
It's time we dealt with the foreign [and shifting of] earnings and 'inversion'/moving offshore issue.
We also certainly need infrastructure spending.
I think there's stuff for Both parties here.


Obama Opens Bidding on Corporate Taxes
Proposes One-Time 14% Tax on Overseas Earnings and Links It to Improving Highways, Transit
By NICK TIMIRAOS and JOHN D. MCKINNON
Updated Feb. 1, 2015 9:52 p.m. ET
Obama Opens Bidding On Taxes - WSJ

WASHINGTON—President Barack Obama is making an opening bid on overhauling corporate taxes and linking it to boosting infrastructure spending, a move that could clear a rare path toward common ground in a deeply divided capital.

Mr. Obama wants U.S. companies to pay a 14% tax on the approximately $2 trillion of overseas earnings they have accumulated, a White House official said Sunday. They would face a 19% minimum tax on future foreign profits. Companies could reinvest those funds in the U.S. without paying additional tax.
[.......]
Doug Holtz-Eakin, a conservative economist and former adviser to GOP presidential candidates, said the proposal appears to be a starting point for broader negotiations with lawmakers. “The good news seems to be that the administration has agreed that lockout [of overseas profits] is an important phenomenon,” said Mr. Holtz-Eakin, president of the American Action Forum, a conservative think tank. He said he is concerned about the proposed tax-rate structure. “But let’s face it, it is an opening bid, not a result,” he added.

Gene Sperling, a former top economic adviser to Mr. Obama, said criticism over where to set the rates should be taken in stride. “When people are putting out numbers, you’re opening up a process for negotiation,” he said.
[.......]
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I won't disagree that the US needs to invest in the much needed repair and upgrade of existing infrastructure.

However, I wonder what sort of jurisdictional issues might be raised in objection to this taxation.

From what I gather, the income that he's wanting to tax are the foreign operations of US corporations where the profit was made in that foreign operation, by foreign employees, from the foreign market, and the profit has stayed in that foreign country. Isn't the only connection to the US corporation some sort of 'holding company' relationship to the foreign operation?

Hey, I don't know, but I'm just asking a question here.
 
mbig said:
A very constructive move I think.
Fair point for starting numbers.
Though I think he may have to go even lower to get the $2 Trillion hoard. Perhaps 8%-10%.
We'll see.
It's time we dealt with the foreign [and shifting of] earnings and 'inversion'/moving offshore issue.
We also certainly need infrastructure spending.
I think there's stuff for Both parties here.


Obama Opens Bidding on Corporate Taxes
Proposes One-Time 14% Tax on Overseas Earnings and Links It to Improving Highways, Transit
By NICK TIMIRAOS and JOHN D. MCKINNON
Updated Feb. 1, 2015 9:52 p.m. ET
Obama Opens Bidding On Taxes - WSJ
Click to expand...

Making US companies less competitive is hardly good for the nation and government spending on what is essentially a private good economically is rather wrong headed.
 
joG said:
Making US companies less competitive is hardly good for the nation and government spending on what is essentially a private good economically is rather wrong headed.
Click to expand...

you apparently saw something that i missed

what about that proposal would cause US based companies to be less competitive internationally
 
justabubba said:
you apparently saw something that i missed

what about that proposal would cause US based companies to be less competitive internationally
Click to expand...

I understood they would be taxed for profits made overseas. That will cost something. Whether it will cause lower reinvestment or higher prices for capital or just out right product prices will determine the path of competitive loss. But it will always weaken the company relative to companies that are not required to pay.
 
mbig said:
A very constructive move I think.
Fair point for starting numbers.
Though I think he may have to go even lower to get the $2 Trillion hoard. Perhaps 8%-10%.
We'll see.
It's time we dealt with the foreign [and shifting of] earnings and 'inversion'/moving offshore issue.
We also certainly need infrastructure spending.
I think there's stuff for Both parties here.


Obama Opens Bidding on Corporate Taxes
Proposes One-Time 14% Tax on Overseas Earnings and Links It to Improving Highways, Transit
By NICK TIMIRAOS and JOHN D. MCKINNON
Updated Feb. 1, 2015 9:52 p.m. ET
Obama Opens Bidding On Taxes - WSJ
Click to expand...



Mornin' Mbig. :2wave: It all is coming down with his Budget.....which includes more spending. Naturally the Demos are focusing on those Middle class economics they came up with.




Obama's fiscal blueprint, for the budget year that begins Oct. 1, proposes spending $4 trillion — $3.99 trillion before rounding — and projects revenues of $3.53 trillion.

That would leave a deficit of $474 billion. Obama's budget plan never reaches balance over the next decade and projects the deficit would rise to $687 billion in 2025. The administration contends that various spending cuts and tax increases would trim the deficits by about $1.8 trillion over the next decade, leaving the red ink at manageable levels.

GOP Rep. Paul Ryan, the new chairman of the tax-writing House Ways and Means Committee, accused the president of exploiting "envy economics." Interviewed on NBC's "Meet the Press," Ryan said, "This top down redistribution doesn't work.".....snip~

Obama sending $4 trillion spending plan to Congress
 
eohrnberger said:
I won't disagree that the US needs to invest in the much needed repair and upgrade of existing infrastructure.

However, I wonder what sort of jurisdictional issues might be raised in objection to this taxation.

From what I gather, the income that he's wanting to tax are the foreign operations of US corporations where the profit was made in that foreign operation, by foreign employees, from the foreign market, and the profit has stayed in that foreign country. Isn't the only connection to the US corporation some sort of 'holding company' relationship to the foreign operation?

Hey, I don't know, but I'm just asking a question here.
Click to expand...
usually those companies are setup at subsidiaries to the parent company. they are basically a separate entity from the main company. the holding company is basically an oversite to the subsidiary.

the main holding company doesn't see one dime of the money that it makes.
yes there is huge jurisdictional issues in play.

Obama has no power to tax money outside the US held by a foreign company.
Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation, and liability.

So if am Techgiant X and I am selling super cpu's in the US and then I have a subsidiary in Europe and Asia.

Those company are completely separate from me for the purposes listed above.
whatever money they make can't be taxed through the parent company.
 
joG said:
I understood they would be taxed for profits made overseas. That will cost something. Whether it will cause lower reinvestment or higher prices for capital or just out right product prices will determine the path of competitive loss. But it will always weaken the company relative to companies that are not required to pay.
Click to expand...

Morning Jog. :2wave: Well that's where he was thinking of trying to get up half of the money. Or so they say. Naturally he looking to pull money where he can.



Another centerpiece of the president's tax proposal is an increase in the capital gains rate on couples making more than $500,000 per year. The rate would climb from 23.8 percent to 28 percent.

Obama wants to require estates to pay capital gains taxes on securities at the time they are inherited. He also is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion.....snip~

Obama sending $4 trillion spending plan to Congress
 
A bit more on this from Bloomberg. ;)



Keeping the cap at $3.4 million, or indexed to inflation, may seem more reasonable. But then the cap is arbitrary and hardly has any impact. There's already a limit on how much people can contribute to these accounts each year ($53,000 for a 401(k), including employer match; $5,500 for an IRA if you are not self employed and under 50). These limits make it nearly impossible to have tens of millions of dollars in retirement accounts anyway.

The cap will initially only impact a rarefied population. But that population will grow as more people reach retirement with career-old-401(k) plans (defined contribution pension plans did not really catch on until the mid 1990s) and rates rise. There are better ways to reform the tax code and collect revenue from the wealthy. A cap based on current, historically low interest rates, merely adds more complication and little benefit.....snip~

The Problem With Obama's Plan to Limit Retirement Savings - Bloomberg Business
 
ludin said:
usually those companies are setup at subsidiaries to the parent company. they are basically a separate entity from the main company. the holding company is basically an oversite to the subsidiary.

the main holding company doesn't see one dime of the money that it makes.
yes there is huge jurisdictional issues in play.

Obama has no power to tax money outside the US held by a foreign company.
Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation, and liability.

So if am Techgiant X and I am selling super cpu's in the US and then I have a subsidiary in Europe and Asia.

Those company are completely separate from me for the purposes listed above.
whatever money they make can't be taxed through the parent company.
Click to expand...
But in practice what's happening is Diverting USA profits from one shell company to another.
ie
http://www.debatepolitics.com/gover...tending-its-based-ireland-lets-make-deal.html

These new taxes would fund Infrastructure that almost everyone/every state/congress wants and the country needs.
Things DO have to be funded.
Otherwise there will rightly be deficit Criticism.
You can't agree with spending money but not taxing to get it.
Is there a better one?

And yes, MMC, It's troubling to see Obama's budget deficit rising into the out years. Not even pretense of balance.
But he is expecting GOP cuts from his opening gambit which may cut those deficits significantly.

Fox
http://www.foxnews.com/politics/201...percent-tax-on-overseas-corporate-profits-to/
...The proposal improves on an idea that the administration has pushed since the summer of 2013. The administration's budget last year proposed a smaller four-year bridge-and-highway fund. While it paid for it by taxing accumulated foreign earnings, it did not specify a formula.

This time, the budget will call for the one-time tax on the up to $2 trillion in estimated U.S. corporate earnings that have accumulated overseas. That would generate about $238 billion, by White House calculations. The remaining $240 billion would come from the federal Highway Trust Fund, which is financed with a gasoline tax.

The former chairman of the House Ways and Means, now-retired Rep. Dave Camp, R-Mich., proposed a similar idea last year with a lower mandatory tax, but the plan did not make headway in Congress.

At issue is how to get companies to bring back some of their foreign earnings to invest in the United States. The current 35% top tax rate for corporations in the United States, the highest among major economies, serves as a disincentive and many U.S. companies with overseas holdings simply keep their foreign earnings abroad and avoid the U.S. tax.

Under Obama's plan, the top corporate tax rate for company profits earned in the U.S. would drop to 28%. While past foreign profits would be taxed immediately at the 14%, going forward new foreign profits would be taxed immediately at 19%, with companies getting a credit for foreign taxes paid....
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So in the deal joG, may also be a cutting of our Too high overall top USA corporate 35% rate to 28%.
IOW, More competitive, not less.
Though it probably needs to be even lower.
 
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mbig said:
But in practice what's happening is Diverting USA profits from one shell company to another.
ie
http://www.debatepolitics.com/gover...tending-its-based-ireland-lets-make-deal.html

These new taxes would fund Infrastructure that almost everyone/every state/congress wants and the country needs.
Things DO have to be funded.
Otherwise there will rightly be deficit Criticism.
You can't agree with spending money but not taxing to get it.
Is there a better one?


And yes, MMC, It's troubling to see Obama's budget deficit rising into the out years. Not even pretense of balance.
But he is expecting GOP cuts from his opening gambit which may cut those deficits significantly.
Click to expand...



these corporations don't want to claim they're from the USA, pay taxes in the USA, but heaven forbid the USA doesn't go out of its way to protect their IP, keep the global oil supply going, etc.
 
mbig said:
But in practice what's happening is Diverting USA profits from one shell company to another.
ie
http://www.debatepolitics.com/gover...tending-its-based-ireland-lets-make-deal.html

These new taxes would fund Infrastructure that almost everyone/every state/congress wants and the country needs.
Things DO have to be funded.
Otherwise there will rightly be deficit Criticism.
You can't agree with spending money but not taxing to get it.
Is there a better one?

And yes, MMC, It's troubling to see Obama's budget deficit rising into the out years. Not even pretense of balance.
But he is expecting GOP cuts from his opening gambit which may cut those deficits significantly.

Fox
In new budget, Obama proposing 14 percent tax on overseas profits to fund infrastructure projects | Fox News

So in the deal joG, may also be a cutting of our Too high overall USA corporate 35% rate to 28%.
IOW, More competitive, not less.
Though it probably needs to be even lower.
Click to expand...

In the end it doesn't matter. the president doesn't have the power or the jurisdiction to tax companies that are overseas and make them pay US taxes on money not in the US.
I could care less what he is wanting the tax money for.

a subsidiary is a separate entity from it's holding company.
as long as that money doesn't enter the US the government cannot tax that money and has no legal authority to do so.

also that isn't a tax cut but a tax increase on businesses. that 28% is in addition to the taxes that they already pay in the US.
so not only are those companies having to pay taxes in their respective countries they now have to pay a tax in the US as well.

also it doesn't matter who the president is.
 
joG said:
I understood they would be taxed for profits made overseas. That will cost something. Whether it will cause lower reinvestment or higher prices for capital or just out right product prices will determine the path of competitive loss. But it will always weaken the company relative to companies that are not required to pay.
Click to expand...
our nation, the only other one being eritrea, PRESENTLY obligates profits earned abroad
so, how would this measure make our country LESS competitive internationally?
 
justabubba said:
our nation, the only other one being eritrea, PRESENTLY obligates profits earned abroad
so, how would this measure make our country LESS competitive internationally?
Click to expand...

It is always a ceteris paribus thing. If you increase the tax, you will be less competitive than today. With Germany and China grabbing the lead in trade even now, we will fall back more. But, if that is okay with you? Just say so, but don't act as though you didnÄt know.
 
joG said:
It is always a ceteris paribus thing. If you increase the tax, you will be less competitive than today. With Germany and China grabbing the lead in trade even now, we will fall back more. But, if that is okay with you? Just say so, but don't act as though you didnÄt know.
Click to expand...

then it would seem what the president is proposing would be more in sync with what you are asserting
so, why the objections?
 
justabubba said:
then it would seem what the president is proposing would be more in sync with what you are asserting
so, why the objections?
Click to expand...

In sync? How do you mean? The President wants the tax in order to reduce US competitiveness?
 
joG said:
In sync? How do you mean? The President wants the tax in order to reduce US competitiveness?
Click to expand...

yes, he is attempting to repatriate the money held off shore
 
AJiveMan said:
And rightfully so. Tax dodgers need to pony up.
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i take the opposite position in this instance
only the USA and the world's worst economy, eritrea, tax profits earned outside their national borders
now, the reason we do it is because the multi-national corporations can and do misrepresent earnings in one country as having been earned in another, for purposes of tax avoidance
but if we instead imposed a flat tax on ALL revenues, from every transaction, with NO tax deductions/exemptions (a la Milton Friedman), we would not need to be concerned with what was earned or parked off shore
this is just one of many beneficial aspects of moving our nation to a flat tax system
 
justabubba said:
yes, he is attempting to repatriate the money held off shore
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I guess it is important to know ecevery detail of his pla gage the exact impact. But cp this sounds rather s dismally counterproductive way to do that. It will cost the country productivity, wealth and jobs unless there are points undisclosed. Do you have an impact study?
 
joG said:
I guess it is important to know ecevery detail of his pla gage the exact impact. But cp this sounds rather s dismally counterproductive way to do that. It will cost the country productivity, wealth and jobs unless there are points undisclosed. Do you have an impact study?
Click to expand...
fresh out
sorry
 
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