I say corporations won the war, they have the legal teams to keep winning. As a response let small/medium sized businesses compete better by just lowing business taxes to really low levels, or progressive taxing as you grow. Right now the high tax rate only really affects our engine small/medium businesses who provide 50% of GDP, 65+% of jobs and 33% of exports.
The only companies paying taxes are small/medium businesses, the tax system here almost is a competitive advantage to large companies over small/medium. If larger companies aren't going to invest here, get competitive help to the small/medium companies and entrepreneurs that are to challenge them.
Personal income tax dodging is bad as that is where most tax revenue comes from. Taxes should probably be lower on income as well though to discourage tax games and retaining more tax whales (wealthy tax payers). People of all brackets need more money in their pocket for this consumer economy that hasn't really rebounded.
https://www.bloomberg.com/news/articles/2017-04-11/sorry-ame...
How low is low enough? Pay your damn taxes.
There are lots of taxes beyond income tax. Basically taxes take about .35-.50 out of every dollar earned through income, sales, other taxes. Business expenses for businesses, kids, credits and other things can help bring it down as well as standard deductions but it is still high.
They also don't include self-employment tax (15%) and sales tax (6-10%). Sales tax and self-employment alone are over 20% close to 25% not counted in the article. Property tax can be close to 1% (depends on property), dividend taxes also aren't included (10-15%).
Please let me move all my retirement savings into foreign stocks before you pass this law, please.
Imagine it is 2007 and you can choose to invest in Apple and receive 60% of profits, or Samsung and receive 100% of profits. What's the better investment?
Imagine it is 2007 and you can choose to invest in Yahoo and receive 60% of profits, or Samsung and receive 100% of profits. What's the better investment?
For now at least, it does seem to have an advantage and draws capital. (For example, Samsung has a huge R&D center in silicon valley.) Of course for every successful IPO in the valley, there are many others who don't make it near that far.
The original poster was saying "...We just change the tax law to tax that money whether they bring it back to the US or not.". This would mean for example, that when selling in China, Apple would have to pay Chinese AND US/CA taxes on the profits made there and Samsung wouldn't - this would put US corporations at a huge disadvantage to their competitors. While I can see the goal is to get more tax money from corporations, it is obvious to see there would be a number of unintended consequences.
What you are forgetting is that US law doesn't discriminate against foreign owned companies. (Which is good - it encourages investment in the US.) So if a corp with US headquarters would pay 30-40% taxes on profits made in non-US countries, this would make those companies very uncompetitive against a foreign company.
>...they will continue to find startups in California because it still offers the best return on investment.
If something like this was done, there may still be lots of money invested in CA, but eventually it would be mostly companies with a HQ outside of the US.
The bulk of Apple's profit has come from design, marketing and engineering by employees, plus outstanding judgment and leadership by Steve Jobs. Those things were done in California. The problem is that Apple uses accounting tricks to transfer the profit to Nevada or Ireland or some other low-tax jurisdiction.
It doesn't matter where the company's headquarters are located. If Samsung has profitable operations in California it should be taxed on that activity at the same rate as any other Californian business. That leads to another point - there are plenty of Californian businesses which cannot use the same accounting tricks that Apple uses. So you have a situation where two businesses that draw from the same pool of resources pay different tax rates. It could be that Business A uses those resources more efficiently but Business B gets funding because its tax rate is lower. That strikes me as inefficient.
Running a business in California is like growing crops in a particularly fertile field. You get a great yield, but you should also pay high rent.
In regards to Apple, Tim Cook in his testimony to congress said:
>...The Company’s FY2012 total US federal cash effective tax rate was approximately 30.5%.1
>…Apple does not use tax gimmicks. Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).
https://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf
>...It doesn't matter where the company's headquarters are located.
If you are a US company, it does.
>...If Samsung has profitable operations in California it should be taxed on that activity at the same rate as any other Californian business.
It is. The difference is that Samsung subsidiaries that make a profit in Germany don't have to South Korea corporate tax when they want to invest in South Korea. In fact, the US is the ONLY country (other than Eritrea) that does this - every other country has figured out that this discourages bringing investment capital back to the home country. The guy who posted the original snarky post about just taxing all the worldwide income of a US corp didn't try to defend it when people posted some of the more obvious consequences. US companies need a level playing field against the companies from other countries
>...That leads to another point - there are plenty of Californian businesses which cannot use the same accounting tricks that Apple uses.
I think you are referring to how some of the big corps essentially pay no US corporate tax. A number of economists have said a much better system would be a revenue neutral system where you remove the corporate tax and increase taxes on capital gains and dividends as that is much easier to tax and corporate taxes tend to hurt the workers in a company and hurt the consumer by increasing prices. But that is a different issue.
>...Running a business in California is like growing crops in a particularly fertile field. You get a great yield, but you should also pay high rent.
CA has unique strengths and weaknesses for a business. There are smart people all over the world so there is no absolute guarantee that CA will do as well 40 years from now as it has done over the 40 years, but that again is a different issue and worthy of its own discussion.
No, this isn't workable.
Don't say something can't be done when it can easily be done. We'll embargo your goods at container ports and land borders if necessary. If you're a digital company, we will drop your ASN traffic at the border.
Donald Trump becoming president is fairly indicative that nothing is off the table.
Now which one do you want to pay all their taxes on all their international income? IBM? SAP? Pick carefully: why should SAP have a competitive advantage over IBM?
Digital companies ALREADY pay taxes for everything that happens INSIDE of the USA. What we are arguing about is stuff that occurs OUTSIDE of the USA.
Donald Trump becoming president simply means crazy idiotic proposals are now on the table. But then again he is realizing "gosh, this is really hard, not as easy as I thought" like health care, wall building, labelling china a currency manipulator, tax reform, etc...
I'm actually pretty fond of some of his proposals, such as deporting illegal immigrants who have committed crimes and making it much more difficult to hire H1Bs (I don't like many other policies he's put forth, but you can't get everything you want); but then, that's what happens when both parties ignore a large chunk of America. Public policy starts coming down the pipe that gets called "crazy idiotic", and then its policy.
American citizens are taxed on all worldwide income, why is it crazy that businesses should be as well? If you pay taxes to some other country, sure, you get a deduction for that. But tax accounting fuckery where you're paying no taxes on a large amount of income? Nope.
There is more than one company called Apple. Which one do you mean?
I think only Eritrea and the US taxes corporations when brining back money into the country. For obvious reasons other countries realized this was not a good approach and don't do that.