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At a press conference on Monday, Pres. Obama proposed new tax reforms against US owned companies in foreign countries, stating as the purpose, the elimination of tax cheats, increasing investment in the USA and bringing back jobs to this country. Again the only result of this is the initial increase in taxes the government will get their hands on, followed quickly by a significant decrease in revenues when the effects of the changes mature.
The following is an excerpt from the WSJ referring to the global impact of these new rules:
"Some of Mr. Obama's advisers understand all this, but then their real goal isn't tax reform or U.S. competitiveness. It's a revenue grab, one made easier by the fact that overseas tax "avoidance" is easily demagogued. To that political end, Mr. Obama conflates tax deferral with the off shoring of jobs -- hence the sly reference to Bangalore, India. With trillions of dollars of new spending, the White House and Treasury are desperate for new tax sources to pay for it all.
But even as a revenue raiser, this is likely to fail. Fewer companies will keep their headquarters in the U.S., especially small or mid-sized firms that can slip away without becoming a political target. Those companies that can't flee will sooner or later demand relief from Congress, which will be happy to create even more loopholes.
If Mr. Obama's proposal has a silver lining, it is that he has embraced the principle that tax rates matter to investment decisions. If his new and short-sighted proposal becomes law, he and all Americans will discover just how much."
Obama's Global Tax Raid
Open Thread
5 hours ago
I get so annoyed at this..... My sole job is to keep corporate tax dollars away from greedy, money-grubbing, wasteful politicians. I have had first hand experience on how CEO's react to increased taxation at various levels of government... down to one telling me "How can we get the hell out of New Jersey?"
ReplyDeleteWith all of this global $$$ raiding, what would prevent a U.S. organization from re-domiciling their organization to another more tax favorable jurisdiction and treating the U.S. entity as a subsidiary. This would enable corporations to get out from under the long arm of the U.S. taxing jurisdiction. The way our tax system is going, it would be cheaper to do this in the long run than to be constantly raped by the U.S. government who constantly is trying to get their hands on money legitimately earned in foreign jurisdictions.
The unfortunately result of this to the U.S. is a reduction in U.S. jobs and a reduction in overall tax revenue.
The better answer would be to do what the government did after 9/11. They offered a reduced tax rate (5.65%, I believe) to companies that repatriated foreign earning to the U.S. Some large corporations repatriated BILLIONS of dollars and Wall Street looked very favorably on this action. This would infuse more money into the US economy, the US government and would help stimulate job creation, as corporations would have more money to reinvest into the U.S.
Okay, I am done with my rant...... I am frustrated with this administrations tax policy....