Yesterday, President Obama addressed the tax breaks that corporations receive for sending our jobs overseas. Yes, corporations are making millions and millions of dollars and NOT paying taxes and then sending OUR jobs overseas so that they can continue to not pay taxes to our government. Keep in mind, these same corporations pay their executives millions and millions of dollars and pay their employees the low wages of India and China.
The proposal takes aim at what corporate executives consider to be one of the most critical features of the U.S. tax code: permission to indefinitely defer paying U.S. taxes on income earned overseas.
Currently, U.S. companies can avoid paying taxes on foreign profits until they bring the money back home. So a U.S. company doing business in Ireland, for example, must pay the Irish tax of 12.5 percent, like every other company doing business in Ireland. But the U.S. firm would owe an additional 22.5 percent to the U.S. Treasury (the difference between Ireland’s tax rate and the 35 percent U.S. tax rate) unless it reinvests the money overseas.
Hum, “permission to indefinitely defer paying U.S. taxes”, that sounds like a good deal. What that means is there is no incentive to bring jobs back to the United States. It provides incentive to keep sending jobs overseas.
If we are to recover from this depression without continuing to bailout banks, then we need jobs, here, on the U.S. soil.
Some in Congress are hesitating support for this change in our Government tax plan.
“Further study is needed to assess the impact of this plan on U.S. businesses,” Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which has jurisdiction over U.S. tax law, said in a written statement. “I want to make certain that our tax policies are fair and support the global competitiveness of U.S. businesses.”
The American worker has always produced superior products. Back in the ’70’s, the mantra was buy “Made in the USA” because purchasing products made here, gave an American a job and was always of high quality. It’s difficult to find something “Made in the USA” anymore. Most items are made in sweat shops that employ children in third world countries. While these sweat shops produce cheap and inferior products, like all (slave labor) sweat shops do, the corporations make millions of dollars and do NOT pay U.S. taxes.
… (President) Obama proposes to move in the opposite direction. He argues that the current system gives tax breaks to U.S. multinationals at the expense of companies that operate solely on American soil. In 2004, the most recent year for which statistics are available, U.S. multinationals paid an effective U.S. tax rate of just 2.3 percent on $700 billion in foreign profits, according to the administration.
“It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York,” the president said yesterday.
The President is correct. Why should multinational corporations receive tax breaks while companies that operate solely on American soil not receive a tax break. The Republicans are always chanting “small business”. Most small businesses operate ONLY on American soil so they don’t get these tax breaks.
President Obama plans on helping small businesses.
To level the playing field, Obama would bar firms from taking deductions for expenses that support their overseas investments until they pay U.S. taxes on the profits. He would also crack down on firms that overstate their foreign tax bills. And he would reverse a Clinton-era rule known as “check the box,” which permits firms to more easily transfer cash between countries. In practice, Obama officials said, “check the box” has been used to shift income away from higher-tax countries and into tax havens such as Bermuda and the Cayman Islands, allowing firms to reduce their tax bills both at home and abroad.
Those provisions would take effect in 2011 and would raise about $190 billion by the end of the next decade. In return, Obama proposes to make permanent an existing tax credit for companies that spend money on domestic research and development programs, worth about $75 billion over the next decade.
Then there are the “tax shelters”, the banks where the “rich” hide their money from the U.S. Government. They shelter their wealth while you and I pay taxes and they don’t.
Obama also proposes to crack down on wealthy people who evade taxes through offshore bank accounts, primarily by targeting financial institutions in tax-haven jurisdictions. That plan, which would net another $9 billion over the next decade, appears to have few opponents.
All this money being denied to the U.S. Government. No wonder the Republicans are yelling that the U.S. Government can’t provide health care for all Americans. All this hidden money in taxes and all this avoidance of paying taxes leaves the Government funds short.
UPDATE: About those “green jobs”…
Now read the rest of this whiny fallacy….
By contrast, more than 200 U.S. companies and trade groups have signed a letter asking congressional leaders to oppose Obama’s proposal to limit their ability to defer U.S. tax payments. The letter, signed by Alcoa, General Electric, McDonald’s and Microsoft, among others, warned that restricting the deferral rules would make it difficult to compete abroad.
The U.S. Chamber of Commerce also denounced Obama’s plan. And John Castellani, president of the Business Roundtable, a coalition of the nation’s largest firms, called it “the wrong proposal at the wrong time for the wrong reasons” that will “make us less competitive in the international marketplace, where, by last count, 95 percent of the world lives.”
Rosanne Altshuler, co-director of the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, said some of Obama’s proposals have merit. But “the big question mark is whether limiting deferral will lead to more jobs in the U.S., and it’s not clear to me that this is what will happen.” Instead, Altshuler said, the result may be to create a tax advantage for U.S. firms to be acquired by foreign owners, an “unintended consequence” that “would probably be bad.”
“There’s a big difference between abusive tax avoidance and legitimate tax policy that recognizes the global economy,” said Sen. Charles E. Grassley (Iowa), the senior Republican on the Senate Finance Committee. “To the extent the president continues on the road of cracking down on tax abuse, he can count on my support. But if he’s using tax shelters as a stalking horse to raise taxes on corporations at the cost of U.S. jobs, he’ll lose me.”
I’m sure you recognized some of the names of the “fortunate 200” companies that will go out of business if they have to pay taxes to create jobs overseas.
We need tax breaks for jobs created here, on the U.S. soil and not overseas. Americans need jobs, jobs that pay a living wage. Let’s see who wins this arguement… the people or the corporations.
Here’s an example of what these corporations do to remain competitive….
Slave labor… This type of forced labor is illegal in the United States and that is one reason why these manufacturing jobs are sent overseas. It’s not just to avoid paying taxes, it’s to force laborers to work for below minimum wages in unsafe and unsanitary conditions.