Harmful tax competition?

[Voltron]

BERLIN – In two days of closed-door meetings recently, an international bureaucracy of industrialized nations—whose membership is dominated by “old Europe”—was attempting to “persuade” low-tax nations to raise taxes and eviscerate financial privacy.

The Paris-based Organization for Economic Cooperation and Development (OECD), which receives some $50 million annually from U.S. taxpayers, has for six years pushed for eliminating what it calls “harmful tax competition”—which can be best described as any policy that undermines the ability of welfare states like France, Belgium, and Germany to maintain extraordinarily high tax rates.

The stated goal of this project is to stamp out so-called “tax havens”—jurisdictions that have appealing tax and privacy laws, and thus attract investment capital and business from high-tax regions, primarily European welfare states. The OECD even has a blacklist, and has threatened these jurisdictions with financial protectionism.

The problem, at least from the OECD perspective, is that the jurisdictions they are targeting insist that they shouldn’t be forced to surrender their fiscal sovereignty until all nations and territories agree to the same policy.

This “level playing field” requirement puts the Paris-based bureaucracy in a quandary since member countries such as Switzerland, Luxembourg, and even the United States, are tax havens under the OECD’s standards. Each has little to no taxes on non-resident investors, and those foreign investors generally can structure their affairs to avoid the reporting of their financial information to home country tax authorities.

Hah --- France thinks the USA has low tax rates.

Yet the OECD has been unsuccessful to date in “persuading” its own tax haven members to adopt bad tax policy, in part because it is much more polite when dealing with its own member nations. There are no threats of protectionism and no blacklist. The bureaucrats apparently realize the futility in fighting nations that can fight back.

So it is little wonder that smaller nations like Panama and the Bahamas felt unduly picked upon when their supposed sin is adopting rules for foreign investment modeled on those of several OECD members.

Representatives from several low-tax countries on the OECD’s hit list attended the free market event and told this journalist afterward that they had heard more than enough to convince them that the OECD was not playing fair. And over the next two days, they stood their ground.

It appears that the OECD conference was doomed from the start. Small countries not privileged enough to be included in the OECD were determined not to cave, particularly since OECD members like Switzerland probably never will. The affair, ironically, was not terribly contentious, as low-tax nations politely smiled and nodded, but in the end, brushed off the tax cartel’s entreaties.

Plunking down $50 million a year should buy a lot of influence, yet for some reason, the White House has stayed largely passive, allowing Treasury Department officials to give the OECD more or less free rein to push tax policy that is clearly antithetical to President Bush’s well-stated beliefs.

And if a fierce tax cutting Bush administration can’t thwart the OECD’s expanding mission, then what might happen under a President Kerry or (heaven forbid) a President Clinton?

The OECD would like nothing more than for the U.S. to end its status as the world’s largest “tax haven”—there is roughly $5 trillion in passive foreign investment sitting inside the United States, capital that generally can avoid being taxed by any government.

http://www.townhall.com/columnists/j...20040621.shtml

If we are such a tax haven how many businesses from Europe have outsourced their manufacturing product to our country? And why is it businesses have to put their HQ's over seas to escape from our overburdened taxes?

[Desertrat]

For your first question, I note that BMW, Mercedes and Toyota have assembly plants here--and are building more--in order to have a greater net-profit benefit. The production is for the US market, of course.

As for the other, corporations move their headquarters offshore to go from some given tax structure to a lesser-cost structure. While we might be lower-tax than France, that doesn't mean US rates are as low as in the Bahamas.

You have two forces at work in the world: Those who want to keep as much of their money as they can; and those who want to tax them for some social purpose. It's only common sense to figure out a way to avoid this latter group.

, 'Rat

[Frohickey]

Originally Posted by Desertrat

You have two forces at work in the world: Those who want to keep as much of their money as they can; and those who want to tax them for some social purpose. It's only common sense to figure out a way to avoid this latter group.

, 'Rat

Yeah.

Too bad we can't ship all the people in the 2nd group to their own little country. And then we will see how long they will be able to survive.

[takao]

Originally Posted by Voltron

If we are such a tax haven how many businesses from Europe have outsourced their manufacturing product to our country?

funny how chrylser produces their cars in austria....(which has higher tax rates than germany) ?
many comapnies pay higher taxes here than in germany but there are still maufacturing here
guess who is the biggest railway track manufactuer of europe (and after a recent purchase even in the _US_) ? voest linz...still paying taxes in austria...


comparing luxemburg,lichtenstein to US is kinda way off the topic about 'tax paradises'
many companies profit from the austrian/german/french infrastructure of very good roads/railways etc. which are paid by taxes from citizents...so citizent have to pay taxes for those companies if they just open a bureau in lichtenstein ?

imagine GM would say "we have a bureau in lichtenstein so we don't pay any taxes anymore" ....

yeah and the US is far from being a tax heaven ... there are places where there are _zero_ taxes..... and thats the problem not some 10% tax difference

[wwworry]

My problem is the way mega-corp plays states and municipalities off eachother to get "special" tax deals. Only the big ones have the clout to do this so everyone else ends up paying for either their special deal here or their special deal across the state border.

All perfectly leagal of course, but unfortunate.

[skunk]

Originally Posted by takao

comparing luxemburg,lichtenstein to US is kinda way off the topic about 'tax paradises'
many companies profit from the austrian/german/french infrastructure of very good roads/railways etc. which are paid by taxes from citizents...so citizent have to pay taxes for those companies if they just open a bureau in lichtenstein ?

imagine GM would say "we have a bureau in lichtenstein so we don't pay any taxes anymore" ....

Ford UK does route sales through Lichtenstein to avoid UK taxes.

[Desertrat]

You don't need tax havens, although they can save a lot of money. Toyota for years worked quite a deal for its US sales. Toyota of Japan sold to an allegedly independent Toyota of the US. ToyUS operated at a thin profit margin, as it "paid" much higher prices to ToyJ than a Ford dealer would have paid FoMoCo. ToyJ avoided being in an ownership position of a highly profitable US sales arm which would have paid US taxes on the profits.

'Rat

[skunk]

Originally Posted by Desertrat

You don't need tax havens, although they can save a lot of money. Toyota for years worked quite a deal for its US sales. Toyota of Japan sold to an allegedly independent Toyota of the US. ToyUS operated at a thin profit margin, as it "paid" much higher prices to ToyJ than a Ford dealer would have paid FoMoCo. ToyJ avoided being in an ownership position of a highly profitable US sales arm which would have paid US taxes on the profits.

'Rat

Yeah, that was about the shape of the Ford deal, too.

[zimv20]

seems to me that, absent other factors, the prime motivation for moving a manufacturing base somewhere is low labor costs, not corporate tax structure.

[Chip NoVaMac]

Originally Posted by Voltron

Hah --- France thinks the USA has low tax rates.

If we are such a tax haven how many businesses from Europe have outsourced their manufacturing product to our country? And why is it businesses have to put their HQ's over seas to escape from our overburdened taxes?

Columnists are great to debate. But why waste the time? Where are your own thoughts from REAL news sources? You try and try again to bait people with this drivel. Some take the bait, some of us know better - sice teh only opinion that maters is the political ones that support yours.

[Voltron]

[quote]
Originally Posted by Voltron
Hah --- France thinks the USA has low tax rates.

If we are such a tax haven how many businesses from Europe have outsourced their manufacturing product to our country? And why is it businesses have to put their HQ's over seas to escape from our overburdened taxes?

Originally Posted by Chip NoVaMac

Columnists are great to debate. But why waste the time? Where are your own thoughts from REAL news sources? You try and try again to bait people with this drivel. Some take the bait, some of us know better - sice teh only opinion that maters is the political ones that support yours.

Are you saying that France doesn't think USA's taxes are too low?
Are you saying that information I imparted was wrong or lies?
And I guess discussion Europes increase in outsources is just drivel.

I didn't realize you controlled what could and what couldn't be discussed on these forums.

If it is the truth who freaken cares about the source.

[Chip NoVaMac]

Originally Posted by Voltron

Are you saying that France doesn't think USA's taxes are too low?
Are you saying that information I imparted was wrong or lies?

If it is the truth who freaken cares about the source.

I may think that the Uk taxes are too high from my US perspective. But then again i don't have the benefit of their "social services" that makes a difference to my way of life.

I had the opportunity to see the benefits of "socialized" medical care. My Dad served 20+ years in the military. Because of my student status I had military medical care available to me till 1979. It may not be perfect. But for those with health insurance, it is the only hope to maintain a productive lief for the betterment of the country as a whole.

I would personally prefer to see higher taxes and a better way of life than lower taxes, and only the rich being able to benefit.

[zimv20]

i'm unclear on who or what is the embodiment of "France." or does french soil hold an opinion?

[Voltron]

Originally Posted by Chip NoVaMac

I would personally prefer to see higher taxes and a better way of life than lower taxes, and only the rich being able to benefit.

Here in the US the poor don't pay income tax. You have to make at least 15,000 dollars before you owe the government more than you get back in tax refunds. If you have kids that number goes up to something like 30,000 bucks. Guess what --- 30,000 bucks aint being poor.

Now how can you cut taxes to less than 0? Unless of course you want to have our government pay them simply for the priveledge of having them as citizens. Tax cuts help those who pay taxes. Who else would it freaken help?

[Chip NoVaMac]

Originally Posted by Voltron

Here in the US the poor don't pay income tax. You have to make at least 15,000 dollars before you owe the government more than you get back in tax refunds. If you have kids that number goes up to something like 30,000 bucks. Guess what --- 30,000 bucks aint being poor.

Now how can you cut taxes to less than 0? Unless of course you want to have our government pay them simply for the priveledge of having them as citizens. Tax cuts help those who pay taxes. Who else would it freaken help?

I really want to know where a family of three or four even can "live" on $30K a year in most of the country of the US. In the DC area 30K can barely make ends meet with apartments going for $850 to $1000 for an studio to one bedroom apartment. That equates to to under $600 a week at $30K before taxes!

A society can be judged on on it helps those that can not help themselves. And in the case of the US, we spend many more "real" dollars on helping those that don't have the means to support themselves than we do to help those within our own borders.

To those that point to those with money to invest. How do those jobs equate to a living wage? The Republicans want to give tax breaks to those that invest in America. Yet Republicans do not penalize those companies that move off shore. They reward "investors" that send jobs to other countries. They reward "investors" that create lower paying jobs. While boosting the standard of living overseas.

I challenge you to move to the DC area and see just how far as a single person you can make it on your own! To make it easier, maybe I should say NYC, SF, Chicago, or any other main US city!

Now if you are talking of the US "policy" of "rewarding" those that have more dependents than they can afford, that is a whole different topic.

For it brings to the front who should be punished. The parents who have too many children, or the children born to those parents that can not afford to have them?

[Frohickey]

Originally Posted by Chip NoVaMac

I would personally prefer to see higher taxes and a better way of life than lower taxes, and only the rich being able to benefit.

I would personally prefer to see lower taxes, and a better way of life than social spending programs for the unproductive, and only the productive people being able to improve their lot.

Growing up, mom had a nice saying when she tells me to set the table and I pout and grumble, "You don't work, you don't eat."