Posted on 04/08/2016 2:59:23 AM PDT by markomalley
The Treasury Department issued two new rules Monday to make it much more difficult for American companies to leave the country. Technically, what the companies do is a "tax inversion," taking over a foreign firm and adopting its target's address as its headquarters.
By doing this, it can pay only the foreign tax rate on the profits it makes abroad. This is attractive because taxes in other developed nations are invariably lower than those in the United States. Yes, ours are the highest in the world.
Monday's two rule changes were President Obama's third attempt to end corporate inversions and stop the exodus of corporations fleeing his economic mismangement. The effects of this latest move will be far the most far-reaching, indeed they already have been, for Pfizer immediately dropped its $160 bilion takeover of Allergan, a drug company in Dublin.
The first new rule targets "serial inverters," which are companies created by one inversion after another. (The phrase "serial inverter" is a deft piece of propaganda, echoing "serial killer," suggesting something heinous even though inverters have simply been following the law.
The second rule limits "earnings stripping," another legal process by which one part of a company makes a loan to another and thus converts taxable income into non-taxable debt.
The moves are intended to reduce or end a trend in which companies find ways to escape American taxes, which hinder their ability to compete with foreign rivals.
None of this would be necessary if the U.S. weren't now such an inhospitable place to do business. The recent wave of inversions and mergers are a direct result of America's 35 percent corporate tax rate. On top of that, America's tax system is not confined within U.S. shores, as most tax systems are, but instead reaches out to try and tax American corporations and citizens wherever they are in the world. This leads to double taxation of overseas profits, first by the foreign tax jurisdiction in which the U.S. corporation operates, and then by Uncle Sam.
It's distressing to see so many U.S. companies move abroad. But Obama's fixes don't address the problem. They attack a symptom without producing a cure. The remedy is a government that stops viewing American business as its own fatted calf to be slaughtered again and again. Companies are merely looking out for the interests of their investors when they leave the U.S. Rather than move out, they'd move in if the tax code were reformed.
President Obama has called for reform, but when he and congressional Democrats talk of reform, they really mean changes that will sluice yet more revenue into the Treasury to finance their spending plans. Republicans in Congress are seeking a larger overhaul of America's illogical and overly burdensome tax code, something that polls shows most Americans want. Under a Republican plan, reform would include reductions in both the corporate tax rate and taxes on the foreign earnings of American companies.
In 2014, when the Treasury first issued rules to try to cut down on companies moving abroad for tax purposes, Obama called the practice "unpatriotic." But it's not unpatriotic for corporations to reduce their burden and maximize the wealth of American investors. By the same token, it certainly isn't patriotic to insist on a ruinous corporate tax rate that taxes companies so heavily that it drives them into exile, and encourages them to keep as much income as possible out of the country to avoid a tax bill that, by some estimates, would not amount to some $2 trillion, more than 10 percent of GDP.
Donald Trump has courted controversy this campaign season by proposing to build a "big beautiful wall" to keep out illegal immigrants. But with this move President Obama is building a wall of his own to keep companies in. That's what prisons are. He wants to subject American business to the highest tax rates in the world. They are competing with global rivals with one hand tied behind their backs.
>>The FMCSA rules were legitimately imposed, in that the law establishing the FMCSA gave it the discretionary authority to make these rules for the trucking industry
Did I miss where We amended anything that gave Congress, the Legislative body, the authority to bestow, on a un-elected agency/dept., law-making powers?
IMO, truly troubling to read that coming from FR...More so even than “...S.S. I ‘paid’ for X years.”
Interesting. You appear to be supporting the idea that intellectual property (which may or may not have been developed using tax money) belongs to the government. That is fascism.
Further, you cite "tax break on R&D" as government spending money on that business. That is exactly backwards. That is government not taxing the money the company spends on developing its business and/or products. Tax cuts are not a government expense - they are government allowing the person or company sovereignty over their own money when they follow the rule that has been established.
Finally, the lack of IP protection would be a strong signal for companies who do a lot of R&D to move their research elsewhere, and get it protected somewhere in the world where private property rights are at least minimally respected.
Right up until their jobs vanish.
No, the IP belongs to the people in most cases. Things that come out of Universities and bought by US corporations are U.S assets, funded by grants and subsidizing. Subsidized R&D belongs to the people because they fund the research through tax breaks.
So no, it’s not fascist. The Federal government has the right to control Patents, arts, and IP for the good of the country.
If you have a problem with granting IP rights to university-developed data, then stop the practice of granting those rights. You are advocating reversing long-standing rules post-hoc.
You are also advocating that R&D not be viewed as a legitimate business expense at any level. If that is true, then why would companies do any R&D here in the states?
You are advocating lawlessness to deal with companies taking advantage of the existing law - not breaking the law, but using it to their best advantage. Since when is staying within the boundaries of the law as it is written an evil to be combatted by any means necessary?
Finally, you say the IP would belong “to the people”. If you mean public domain, you may be correct - although that completely breaks the US patent and IP protection laws and rules as written. However, how would the IP protection be administered in such an event? The government (supposedly in the name of the people) would administer the data as it sees fit. Would you care to wager that a third party accessing the details required by law to file for a patent by the originating party would be purchased from the government? In other words, what semantically is public property is sold by the government?
That is fascism - the theft of IP granted under existing rules by the government for use in generating revenue for the government.
The US is currently one of the better venues for protection of intellectual property in the world. What you propose is to gut those protections. I do not think you have foreseen the likely consequences of such a move.
Government manages the patent system, but does not control patents or IP. You are advocating that government owns everything - and that originators of ideas and data can benefit from their idea or data only as long as it serves the government purpose.
That may be worse than fascism. It's communism under the veneer of capitalism.
Nope. Stop telling me you think I’m saying and listen to what I am saying.
There is no reason why the government cannot revoke a patent or a dissolution of copyright. If it’s funded by public money. It’s not federal money, it’s public money. There is no such thing as federal money. It’s essentially a leased patent to the corporations. They get exclusive rights and the public gets payed back through jobs, infrastructure improvement and corporate taxes and services.
Let the government re-lease the patent to a U.S corporation willing to produce. Who then in turn license the technology to other corporations.
There is no reason why the government cannot revoke a patent or a dissolution of copyright. If it’s funded by public money.
Except for that pesky ex-post facto law change and voiding of contracts, you are correct. The government can declare itself to be omnipotent.
It’s not federal money, it’s public money. There is no such thing as federal money.
Is that why you state that tax breaks cost the government money?
It’s essentially a leased patent to the corporations. They get exclusive rights and the public gets payed back through jobs, infrastructure improvement and corporate taxes and services.
Nope. There is no such codicil in any of the university-private company contracts established for public-private research (which are partially funded out of the company's pocket, normally). You are adding an implied condition ex-post facto, which is supposed to be illegal.
Let the government re-lease the patent to a U.S corporation willing to produce. Who then in turn license the technology to other corporations.
Because the patent was not a lease to begin with - again, this is ex-post facto change of the patent law to insist it is - the government has to steal the patent information (which is required by law) in order to resell it (provide the information to a third party who under current law has no right to it), who then has the right to license it to make even MORE money off of someone else's work! What a deal!
Venezuela here we come.
Let's simplify the discussion: Do you believe that it is legal, moral, and defensible that existing law and contracts be voided because companies are using other existing law (via inversion) to legally shield some of their earnings (those earned outside the US) from the highest tax levels on Earth?
Because, whether you believe it or not, that is what you are advocating.
Good bye. You have no argument. Don’t just read the constitution. Try to understand it.
Thank you for the succinct answer to my question from post 28:
Let's simplify the discussion: Do you believe that it is legal, moral, and defensible that existing law and contracts be voided because companies are using other existing law (via inversion) to legally shield some of their earnings (those earned outside the US) from the highest tax levels on Earth?
Have a great day, FRiend.
Friday is Johnny Walker Green night. Neat.
By that twisted “reasoning” the Federal government can do anything if they can claim it is “for the good of the country” (or for the good of the “Chilrens” the good of the “repressed minorities”….) .
The Federal government could under that reasoning take away your land, your personal property, your children, your guns, limit your free speech rights, all without due process ….no wait….they already have been doing that and doing so Unconstitutionally. And here I thought that we Constitutional Conservatives were against that sort of thing.
Subsidized R&D belongs to the people because they fund the research through tax breaks.
Do you take advantage of any “tax breaks”? For instance, when you file your personal taxes, do you take a mortgage interest deduction? If so, congratulations, your house then under that line of reasoning belongs to the Federal government and the “people”. I am one of the people. I’m coming to your house and demand you let me stay there for free since the taxes I paid and since I don’t have a mortgage deduction, I offset/fund your deduction so I am helping to “fund” your home. Do you take a child credit deduction, make use of pre-tax payroll deductions for a 401k or for health care premiums? Do you own a business and take legitimate tax deductions (tax breaks) for that business?
Government manages the patent system, but does not control patents or IP. You are advocating that government owns everything - and that originators of ideas and data can benefit from their idea or data only as long as it serves the government purpose. That may be worse than fascism. It's communism under the veneer of capitalism.
Well said.
Don’t just read the constitution. Try to understand it.
I don’t think you have very much understanding of the Constitution as to property rights, including intellectual property, as they were very important to the Framers.
The Primacy of Property Rights and the American Founding
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.