Purpose of any Company is Profits - screw the workers

[classicman]

Originally Posted by sugarpop

I think CNN is the most unbiased news source on TV.

That I'll agree with the rest is all BS - Maddow is as biased as they come. No different than the rest.

[xoxoxoBruce]

Where's Walter Cronkite when ya need him?

[classicman]

Ballmer Says Tax Would Move Microsoft Jobs Offshore

June 3 (Bloomberg) -- Microsoft Corp. Chief Executive Officer Steven Ballmer said the world’s largest software company would move some employees offshore if Congress enacts President Barack Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.

“It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

Obama on May 4 proposed outlawing or restricting about $190 billion in tax breaks for offshore companies over the next decade. Such business groups as the National Foreign Trade Council, the U.S. Chamber of Commerce and the Business Roundtable have denounced the proposed overhaul.

Typically, he said, a company like Microsoft develops a product like Windows in the United States and deducts those costs against U.S. income. It then transfers the technology to a subsidiary in Ireland, where corporate tax rates are lower, without charging licensing fees. The company then assigns its foreign sales to the Irish subsidiary so it doesn’t have to claim the income in the United States.

“What Microsoft wants to do is deduct the cost at a high tax rate and report the profits at a low tax rate,” Bosworth said. “Relative to where they are now, the administration’s proposals are less favorable, so there will be some rebalancing on their part.”

Ballmer estimated that higher taxes under the proposal would reduce profits for companies that comprise the Dow Jones Industrial Average by between 10 and 15 percentage points.

“It’s just a question of how much will the Dow come down,” Ballmer said. “It’s not about companies anyway; we’re talking about shareholders.”

While the rules were designed in 1997 to protect U.S. companies from paying excessive tax to other governments, Obama administration officials say it has evolved into a way to duck U.S. liabilities. Altering the rule, which Obama dubbed a “loophole,” would generate $86.5 billion in new revenue by 2019, the administration says.

The third international tax proposal would change rules governing how companies can claim tax credits for levies paid to foreign governments. Officials say some companies abuse the rule to accelerate tax credits before they could otherwise be claimed.

Obama has said his proposals would protect or create jobs in the United States.

Thompson called the Obama proposals “counterintuitive” to the administration’s other stated goals of fostering an innovation-oriented economy.

“It is a little bit ironic that most of our most significant trading partners and partners globally have taken the tack that they’ll reduce corporate tax rates to stimulate economic growth and not raise corporate tax rates,” Thompson said.

A pretty good read. I can't wait to hear about the meeting Obama has with these guys. Should be interesting.

[TheMercenary]

A more likely senerio would be for the companies to just move lock-stock-and-barrel and no longer be a US company. In the long run, if it is painful enough for them to stay, it would be cheaper for them to become a company of Dubi.

[classicman]

Perhaps they will just "move" their headquarters to, say Dubai or some other tax friendly nation. I wonder what the ramifications would be on that scenario.

The state of Delaware has a lot of companies "headquartered" there for similar reasons. They were getting a lot of tax revenue by luring companies there. I think the state is now taking a huge revenue hit due to the economy.

[Clodfobble]

“It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

Why wouldn't they just do that now? It's cheaper, but not cheaper enough?

It's because there's a skill limit to what you can outsource, plain and simple, and most companies who significantly outsourced learned this the hard way in the last 5 years. The innovation still happens here. If the other countries had it, they'd be competing against us with their own companies, not trying to siphon off our low-skill jobs. When's the last time we outsourced anything to, say, Japan? We don't, because their workers are just as expensive as ours, because their overall skill level is commensurate with ours. Ballmer's just using PR scare tactics to get out of paying higher corporate taxes.

[TheMercenary]

All they need to do is move the headquaters and re-flag the company. Any aspect of the company could still remain here.

[classicman]

Originally Posted by Clodfobble

Why wouldn't they just do that now? It's cheaper, but not cheaper enough?

All I was saying is that they can incorporate the company overseas. Nothing really changes but the paperwork and the tax liability. I don't profess to be an expert. That is why I posed the question in the first place. I'm not talking about outsourcing jobs, just the tax liability, so to speak.

[ZenGum]

[tailposting]

This is why I am an internationalist. The present system of nations gives global corporations the opportunity to play national governments off against each other in a low-tax bidding-war.

[/tailposting]

[Clodfobble]

Originally Posted by classicman

All I was saying is that they can incorporate the company overseas. Nothing really changes but the paperwork and the tax liability. I don't profess to be an expert. That is why I posed the question in the first place. I'm not talking about outsourcing jobs, just the tax liability, so to speak.

No worries, I was only getting kind of ranty at Steve Ballmer (who I happen to think is a tool,) not you.

Originally Posted by TheMercenary

All they need to do is move the headquaters and re-flag the company. Any aspect of the company could still remain here.

Why haven't they already done it?

[classicman]

Some have - Some have different "companies" in many countries.

[TheMercenary]

Originally Posted by Clodfobble

Why haven't they already done it?

My guess would be that it has not become financially painful enough yet. But I have no doubt that when it does they will move.

[classicman]

Originally Posted by TheMercenary

My guess would be that it has not become financially painful enough yet. But I have no doubt that when it does they will move.

...and then the taxes received from those business will, instead of increasing with the raised tax rate, will become virtually zero. After which the liability of the companies remaining becomes even greater and their rates increase further and the cycle continues - hypothetically.

[lookout123]

The higher the tax rate goes the more money will be spent on finding bigger and better loopholes. It is a never ending cycle where the only goal is for the politicians to keep enough people hoodwinked so they stay in power.

A flat tax with ZERO if's and's or but's is the only way to stop the cycle, so it will remain a neverending cycle.

[tw]

Originally Posted by TheMercenary

My guess would be that it has not become financially painful enough yet.

Reality - over 50% of American companies pay no taxes including some of the largest. These 'we will move if taxes increase' is not the threat. Taxes are higher in other countries where they might want to relocate.

The reason for moving is most often to avoid US laws such as bribery. To permit corruption and to even diminish shareholder control is more often a reason to move overseas. American corporate taxes are some of the lowest in the world once we add all the exemptions and other 'secret' benefits.