US Senate Panel Approves Tax Cut For Manufacturers

Discussion in 'Politics, Religion, Social Issues' started by zimv20, Oct 12, 2003.

  1. zimv20 macrumors 601

    zimv20

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    #1
    link

    now check out this international tax break:
    that's an 85% reduction in taxes. might that not encourage a whole slew of US-based businesses to move their operations overseas? after the enron hoo-ha, didn't bush promise to crack down on US companies using international status to avoid paying taxes? i don't understand how, even if it's now sanctioned, that it helps the US economy.
     
  2. wwworry macrumors regular

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    #2
    yes, that seems strange to me. It seems like it would encourage manufacturers to move operations overseas if the taxes are less. But I can't claim to be an expert. McRain would know, maybe.
     
  3. Desertrat macrumors newbie

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    #3
    Reduced taxes on profits of US corporations would help their competiveness against foreign corporations, to some extent. It might slow the amount of layoffs.

    Possibly any repatriated money in part would be given out as dividends to stockholders--and taxed--or dividends increased.

    Nothing now prevents any company from moving to any low-tax location. Heck, if the U.S. made of itself a tax-haven for business, wouldn't many corporations move here? Or move back here? There's more to profitability than labor costs.

    'Rat
     
  4. zimv20 thread starter macrumors 601

    zimv20

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    #4
    you're arguing trickle-down, right?
     
  5. Desertrat macrumors newbie

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    #5
    "Trickle down"? Not that I know of. Hadn't planned on it. I'm a lot more interested in corporate health from the standpoint of employment. Paychecks for folks now out of work.

    More spending on the part of those stockholders who might get dividends. In a consumer economy such as ours, that's a Good Thing.

    'Rat
     
  6. zimv20 thread starter macrumors 601

    zimv20

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    #6
    i suspect the majority of the increased profits will go straight to the board members.

    i suspect that's part of the plan, too.

    after all, if corporations going overseas to get out of paying taxes was a _good_ thing for the economy, why was bush and congress making so much noise about it during the enron scandal? they promised to crackdown on such companies. now they're rewriting laws to encourage it.
     
  7. Mason macrumors regular

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    Aug 21, 2003
    #7
    They are also considering reducing the SUV tax break from $100k to $25k. Car manufaturers are fighting this, obviously.
     
  8. wwworry macrumors regular

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    Mar 23, 2002
    #8
    I thought the issues was on taxes US corporations pay on their overseas operations, you know, the jobs they moved from Ohio to Mexico or China.
     
  9. Desertrat macrumors newbie

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    #9
    zim, any remuneration to board members is far more likely to be in the form of stock options than cash. It's the tax-bracket thing.

    IMO, a problem with getting corporations to do better at paying dividends is that the big institutions--universities, churches, mutual funds--want increases in capital value more than they want the generally-lesser rate of return that dividends offer. The vote is for dividend money to be used for growth (acquisitions, etc.) The small stockholder is generally better off if he can let dividends stay in the corporation as payment for more stock.

    wwworry, you may well be correct. It's a sad thing, though, when even those corporations which have moved operations out of the country still only have a P/E of 30 or worse...

    'Rat
     
  10. mactastic macrumors 68040

    mactastic

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    #10
    Hey 'Rat, does it bother you at all that some major US companies have moved headquarters to places like the Cayman Islands just to avoid paying higher US taxes, or is that just another savvy businessman taking advantage of a loophole to you?
     
  11. Desertrat macrumors newbie

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    #11
    mac, I would be a lot happier if there were no such thing as a "multi-national" corporation. Purely opinion, but if (as example) GM wanted to buy car parts from a Brazilian supplier, that supplier should be a Brazilian corporation and not a subsidiary of GM. IMO, when corporations get gigantic and far-flung with their operations, they accumulate the same sorts of inefficiencies as governments. Further, I think the top management becomes divorced from the concerns of the shareholders--leading to follies such as Enron in the derivatives market--and pay too much money to the CEO and other upper-echelon types.

    What I do know from the hard numbers reported in the various business papers is that corporated profitability as a percentage return on either equity or investment has been falling for well over twenty years. (Another reason to gripe about CEO pay.)

    A corporation which has fewer taxes to pay can become profitable or can become more profitable. They are better able to compete with other producers, offering lower prices.

    Rembember that it's not just taxes on profits that are of concern. It's such things as franchise and (sometimes) property taxes as well.

    I've yet to see a business that didn't fare better when its overhead is reduced.

    I find it quite understandable that corporations would move their headquarters or their operations to places where the cost of doing business is less. For a long, long time, that was here in the US. That began to change, back some 30 or 40 years ago. Now, we're in deep doo-doo.

    I sure don't have any answer that could save the $20 to $40 per hour jobs we're losing.

    'Rat
     

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