Kerry to Propose Eliminating a Tax Break on U.S. Companies' Overseas Profits

NY Times ^ | 3/26/04 | Edmund L. Andrews and Jodi Wilgoren

[oceanview]

a smart move by Kerry, this offshoring issue is huge.

[NormsRevenge]

Kerry campaign officials said they hoped his proposal would appeal to people concerned about the loss of jobs to low-wage countries like China and India. But by advocating a crackdown on international companies but not an increase in the overall level of corporate taxes, the campaign is trying to avoid angering the business community.

We'll see how it plays in Peoria.. and Singapore . ;-)

[oceanview]

only Peoria matters.

you can still be a conservative and recognize that the current corporate tax laws are insane. Intel can build a plant in China, using equipment purchased in Japan and South Korea, and get a US tax writeoff for it.

[jwalsh07]

Why doesn't he propose to Teresa that she move the 69 manufacturing plants that are overseas including China back to the USA? How's that for a proposal?

[dalebert]

Sure he will. I hope no one thinks for a minute big money Kerry will propose anything like this.

[goodnesswins]

Uh huh....that's TODAYS proposal....I'll wait for tomorrow, Mr. Flip Flop.

[maui_hawaii]

If this is all it is--eliminating tax breaks on overseas profits--I think that would be a stupid idea. Absolutely stupid.

If we want to fix the problems in the American and Global economies (yes the Global economy) what America should do, is either A) cut taxes on companies that import only from countries that have an inked FTA with the US. or B) levy a tarriff on those ONLY from non FTA holding countries, or raise corporate rates on those importing from non-FTA countries.

Its either an incentive, or a disincentive, but the end result is to trade more with people willing to actually trade with us.

Raising taxes on overseas profits is a BAD idea.

[Petronski]

Is this 'flip' or 'flop?' I agree with him and I just want to know where I stand.

[maui_hawaii]

If they buy stuff from Korea, and Taiwan, and build a plant in Japan...thats fine...just so long as they sell the end product in Taiwan, Korea, and Japan.

Under that circumstance they SHOULD get a tax writeoff/break for it.

Of course that is NOT what is happening, nor the problem, but should it happen, thats a good thing.

[Shermy]

a smart move by Kerry, this offshoring issue is huge.

Very smart since it has almost zero to do with why jobs are outsourced, but sounds like it. Kerry the "free" trader gets to pretend he's going to do something about jobs while not offending his corporate benefactors.

[oceanview]

why should US taxpayers subsidize Intel for building a plant that employs no americans?

[maui_hawaii]

Because under the model mentioned above, its not at all subsidizing. Under those circumstances, lets map out how it works:

Private investors give money to Intel, whether its banks or whoever.

They put a factory in Japan and sell products to Japanese, Korea, and Taiwanese consumers.

The profits are sent back home. Because of the economic situation overseas profits there are about 10 notches below US profits. In order to make them more profitable we have to lower the taxes. Investment is not a zero sum game. There isn't a limited number of dollars to be invested. There is however a limited number of consumers.

Its essentially tapping into a market that otherwise doesn't exist for us. We are rounding up foreign money and actually bringing it back home. In the end you employ more Americans under that scenario.

Under that model we are not nessarily buying from Japan and selling in America...

I understand what you are trying to accomplish, and I agree with the goal, but this is a bad way to do it.

Tax breaks like that though cannot be all lumped in together. Companies all have different models. Some should be rewarded but others should not.

For companies that ultimately ignore the demand in their host country (like China) and want to supplant our production for theirs...thats a different story.

[GeronL]

How will raising taxes help make jobs??

Thats stupid.

[maui_hawaii]

In order to accomplish our end goals of profits but also employing Americans--we need look long and hard and one thing--actual consumer driven demand in foreign markets, and we should encourage more investment in those that allow us to tap those markets.

That is a HELL of a lot more important than who is cheaper on an absolute scale.

We have to reward the demand with tax breaks, not who is more cheap than his neighbor.

[maui_hawaii]

It can, but depends on how and where the taxes are levied.

We have to play kung fu master with the code (as it is now) but raising some taxes in some areas sometimes is very good for our economy.

It depends on a bigger strategy, rather than just 'raising taxes'...

[GeronL]

Raising taxes is never a benefit for the economy.

[maui_hawaii]

Barbara Streisand

It depends on the tax. Income tax, no. Income tax sucks.

Taxation on business should fit the national strategy. Certain taxes and tarriffs are good for the economy. Certain taxes are great for the economy, especially when talking about trade and global development.

[GeronL]

Like the sugar tariff?? Protect 300 jobs in Louisiana by making sugar prices twice as high as the rest of the planet and force thousands and thousands of jobs into Canada and Mexico.

[maui_hawaii]

No, not like sugar tarriffs.