A strategy for re-partriating foreign profits

Discussion in 'Politics, Religion, Social Issues' started by chrmjenkins, Oct 20, 2011.

  1. chrmjenkins macrumors 603

    chrmjenkins

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    #1
    Foreign profits and their subsequent taxation is a topic I'm very thin on in terms of knowledge, so when I came across this op-ed it sounded very logical and like a sensible approach to fixing what is broken (imagine that, European countries with a more sensible approach than our own).

    I'm curious what other people think of the plan and whether or not it has the potential to actually address the current issues. Quoted below.

    http://www.nytimes.com/2011/09/19/opinion/bring-american-companies-foreign-profits-back-home.html
     
  2. Iscariot macrumors 68030

    Iscariot

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    #2
    So tax evasion is a felony and I could go to jail for 5 years, but corporations that have stolen billions -- if not trillions -- from taxpayers to line their own pockets should be rewarded handsomely. Makes sense.
     
  3. iJohnHenry macrumors P6

    iJohnHenry

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    #3
    And I think we should move that deck-chair over there!!! :mad:
     
  4. rdowns macrumors Penryn

    rdowns

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    #4
    I say let them have a lower rate to repatriate their profits then require them to spend at least 50% of their tax savings on creating NEW jobs. I'd also reduce their payroll taxes for those new jobs for 2 years.
     
  5. chrmjenkins thread starter macrumors 603

    chrmjenkins

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    #5
    I agree with your sentiment but what they are doing is completely within the law. I think most would view retroactive punishment as unconscionable for a variety of reasons, much like deporting all 12+ million illegal immigrants outright would be (and what they are doing is actually illegal).

    I like that idea but I wonder how job creation with said money would be monitored and enforced?
     
  6. mkrishnan Moderator emeritus

    mkrishnan

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    #6
    This has been a massive quagmire in Obama-era green spending. There's a lot of Mssrs. Obama and Biden showing up at plants and gloating over how they are world class, and then it frequently turns out that, after all the federal, state, and local incentivization, the company that was supposed to generate 4000 jobs has generated 400 or 40.

    I'm also concerned about "creating" jobs that are artificial. In my consulting days, companies loved trying to create an apparent cost savings by "getting rid of" an employee, except that the person was never fired or laid off -- just sent somewhere else in the company. Similarly, a lot of the current White House jobs plans involve spending money on avoiding laying people off (e.g., teachers) -- this is really not jobs creation in any meaningful way.

    I like the idea of incentivizing jobs creation, but how do we do it in such a way that it won't immediately be gamed to the point of unrecognizability?
     
  7. Iscariot macrumors 68030

    Iscariot

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    #7
    It was supposed to be within the law to protest, too.
     
  8. rdowns macrumors Penryn

    rdowns

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    #8
    Let's stop giving any money upfront and implement the tax cut based on each new employee hired and retained.
     
  9. Rodimus Prime macrumors G4

    Rodimus Prime

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    #9
    yeah that is my though. If they could give a tax holiday there should be some pretty heavy restrictions on that money they bring home big time after the crap companies pulled last time.

    Sure they can bring it home but the money must be used for new jobs here and growth here.
     
  10. mkrishnan Moderator emeritus

    mkrishnan

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    #10
    Maybe something like an actual net increase in the number of directly employed US workers overall. Randy's idea's not bad, but the devil's in the implementation....
     
  11. chrmjenkins thread starter macrumors 603

    chrmjenkins

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    #11
    You're free to protest as long as you still pay. ;)

    And how to treat jobs created (how many hours, benefits, etc.)
     
  12. CalBoy macrumors 604

    CalBoy

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    #12
    The problem with any tax holiday is that there's no way to determine how much of the money was generated outside the US. Offshore bank accounts in tax havens are flush with cash, and I'm very skeptical that all of it was generated overseas. Some of the cash was surely generated in the US.

    Since these companies are also apparently not paying local taxes (at least according to what I know), we'd be letting them get away with a lower tax rate than the poorest Americans for no other reason than they can complain louder and more persistently than the rest of us.
     
  13. chrmjenkins thread starter macrumors 603

    chrmjenkins

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    #13
    What are the chances it will be taxed properly otherwise though? There seems to be an element of "we made a mistake, here's a patch for the old problems and here's new rules going forward."

    The effort to try and audit all company's books at this point would just be monstrous. It's likely more efficient for the tax payer's dollar to not do it.
     
  14. CalBoy macrumors 604

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    #14
    I don't honestly know.

    However, the cash outside US borders is rumored to be somewhere between $1-2 trillion. That's a lot of money to pay accountants, even if we only take 35%.
     
  15. Peace macrumors Core

    Peace

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    #15
    Doesn't the government already know how much money is offshore ? Tim Cook just said in it's earnings call Apple had 66% offshore. It's not like there's some secret about it.
     
  16. chrmjenkins thread starter macrumors 603

    chrmjenkins

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    #16
    And they are going to pay their accountants to hide that money. I just don't know that it could be done efficiently. I also think that the full 35% is unrealistic, especially if it doesn't account for taxes already paid in the country they were earned.
     
  17. Iscariot macrumors 68030

    Iscariot

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    #17
    700+ people would disagree with you.

    If they were allowed.
     
  18. chrmjenkins thread starter macrumors 603

    chrmjenkins

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    #18
    I think I misunderstood your initial allusion. I thought you were talking about people protesting their own taxes.
     
  19. CalBoy macrumors 604

    CalBoy

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    #19
    They've already done that though. The trick is getting countries like the Cayman Islands to play fair.
     
  20. Iscariot macrumors 68030

    Iscariot

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    #20
    In either case, I don't think protesters are interested in rewarding gluttony to be allowed a seat beneath the table begging for crumbs.
     
  21. chrmjenkins thread starter macrumors 603

    chrmjenkins

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    #21
    Nor do I, but in the face of a compromise, opting to not do so can be painted as unwillingness to compromise and a sign of demands not connected with reality. Not saying it's right, but it would be how they parrot it to the right.

    Well, if it is in the Cayman Islands, it's being reported as foreign profits (I assume) meaning it would be subject to tax when brought back. The Cayman Islands wouldn't need to play ball unless the accountants reported it as foreign, then reported it as domestic again when asked but somehow fudged numbers to act like they paid taxes on it. I guess they could say it was from a country subject to >20% tax, but if that was so, why bother bringing it to the Cayman Islands? Just let it sit in country of origin for operations there.
     
  22. iJohnHenry macrumors P6

    iJohnHenry

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    #22
    How about some more gun-boat diplomacy, like the American blockade of Japan, to force them to open up their markets to American goods.

    Somewhat before WWII. A coincidence?

    Something should have been done about Switzerland in the first place, then we might not still have this problem of criminals, despots and tax-evaders moving their money off-shore.
     
  23. Macky-Mac macrumors 68030

    Macky-Mac

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    #23
    One place to start would be to stop giving preferential tax rates for capital investments that create jobs overseas instead of in the US

    of course it's illegal to lie when you file your taxes......and yes people do get caught and prosecuted :eek: (try to remember that the next time you lie on YOUR taxes)
     
  24. iJohnHenry macrumors P6

    iJohnHenry

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    #24
    In for a ¢ in for a few million £s??

    The risk-reward favours the bold. And who among us would risk federal prison for a few thousand dollars?

    But those with money, balls, and attorney/accounts can chance the lie.

    Especially when they have already crafted the laws pertaining thereto. ;)
     
  25. Ugg macrumors 68000

    Ugg

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    #25
    The system definitely needs reform and the current system is a disaster. Part of the problem is international accounting standards and the US needs to play a part in refining them. Also, we need to stop allowing companies like GE to pay no federal taxes. The corporate tax code is a travesty.

    I think the NYT article is definitely a step in the right direction.
     

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