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To: All

the proposal is here.....

http://www.johnkerry.com/pressroom/clips/news_2004_0326.html

It is not targeted at Heinz, but it does include a loophole that would exempt Heinz.

Here is the info....it is not specific for Heinz, but for a specific type of company that supposedly is rare in industry....http://www.techcentralstation.com/041504C.html

I am not business saavy enough to understand it very well. If this guy is right though, Kerry did exempt the type of company that Heinz is from his anti-outsourcing proposal, though not Heinz by name only or specifically.


34 posted on 07/14/2004 6:19:20 PM PDT by rwfromkansas ("Am I not destroying my enemies when I make friends of them?" -- Abraham Lincoln)
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To: rwfromkansas

So how do U.S. multinational firms stay competitive despite these disadvantages? Under current law, they can locate production and profits abroad and avoid paying the very high U.S. taxes by letting profits sit in bank accounts overseas. This strategy does not avoid foreign taxes, but since those are much lower than ours, the playing field is leveled somewhat. A U.S. manufacturer can produce a good in Ireland for sale in Europe and be competitive despite our high tax rates.



Senator Kerry plans to end this. If a multinational makes money abroad, it must pay U.S. taxes immediately. This will make the negative impact of high U.S. taxes impossible to avoid and force U.S. firms to significantly increase prices. That should lead to sharp reductions in market share and employment both at home and abroad, and a likely wave of foreign acquisitions of U.S. companies. The plan's second measure, a 1.75 percent reduction in the corporate tax rate on all worldwide profits, would not begin to offset the lost benefit of tax deferral.



The Kerry team clearly recognized the possibility that they were causing significant harm, because they added a loophole. If a U.S. multinational produces a product in a foreign country for consumption in that country, then they will continue to allow the firm to avoid U.S. tax until the money is mailed back home.



Think of all of the needless and duplicative activity this will generate. Multinationals will be forced, in pursuit of tax savings, to introduce newer and smaller production facilities in every country they serve. Transportation costs are low enough, and scale economies large enough, that most multinationals operate a few production facilities located in attractive hubs around the world.



So why would anyone propose such a thing? Some industries, like food production, already operate that way. Because of local food regulations, and concerns about spoilage, it is often the case that food companies locate a separate plant in each country that they serve. Chief among these is Heinz, which owns 57 plants outside of North America that, as the company states, "provide products to consumers in those markets."


59 posted on 07/14/2004 7:27:31 PM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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