I say, the system should be biased to favor that corporation at the EXPENSE of Stanley, not the other way around.
Can be done, but not through an income or tax, flat or otherwise in place.
On the otherhand,
Rep. Bill Archer, Chairman, House Ways and Means Committee:
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Under a retail sales tax,
- It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.
"...why should Stanley Tools be facilitated in manufacturing tools with foreign labor, then locating in bermuda as a tax haven, while profiting in the US market, when some other tool company makes their stuff in the USA and is not gaming the tax system offshore?"
oceanview, your envy of the wealthy is showing again. In fact, Stanley is the only major tool only company (some companies that make tools are subsidiaries of other profitable companies) that has not at least nominally left the US in recent years. The reason is that the tool business is extremely competitive and foreign tool companies have a decided tax advantage over US companies.
German and Japanese tool companies don't have to pay taxes to their home nation on earnings generated outside that country. That means that they don't have to pay taxes to their home country on profits that they make in a country with a 15-20% tax rate. US companies, on the other hand, have to make up the difference between that 15-20% tax rate and whatever their current high US tax rate is. In other words, the US company is going to have to pay at least 45% income tax on all of their earnings, regardless of where that income was generated, if not to the country where the income was generated, then to the IRS. The reason that I say, at least, is because if the foreign country taxes their income at a higher rate than the US - say 60% - then that is their tax rate, not the US 45%. The foreign company pays whatever the going tax rate is in each country, so some of their income may be taxed at 60% in one country and only 15% in another. The end result is that their total tax rate is far lower than that of a US company operating in the same countries, with the same sales, since the IRS wants an extra 25% tax from the US company, for income from a country that only has a 20% tax rate.
In a highly competitive business like the tool business, that additional 5-30%, depending on what country the income comes from, can be the difference between profit and bankruptcy. Several tool companies and other US companies in highly competitive international businesses have nominally incorporated offshore in recent years, not only to save on those taxes, but to remain competitive with their foreign counterparts. Most continue to employ US labor and keep their offices here.
However, a number of US Representatives and Senators threw a hissy fit over this entirely legal maneuver and tried for several years to pass legislation to punish US companies that nominally relocate offshore (notice that they punish companies that find a way to succede - that's liberalism). They finally got that legislation through in the post 9/11 fervor. The fools don't realize that when the next US company finds it necessary to incorporate offshore in order to compete, they will now be forced to move not only their place of incorporation, but all of their operations (can you say JOBS?) offshore, as well, to avoid being punished by that new law. In other words, they will become a truly foreign company, with a foreign home office and foreign workers. Of course, they could remain here and lose money until they are bought out by their foreign counterparts and become a truly foreign company that way. Either way, we lose. Both the Democrats and Republicans are so addicted to spending our money, that they are oblivious to the real business effects that their greed will have, so we will probably have to lose a few tens of thousands of jobs before they realize what monster their greed has wrought.
The real problem, in this case, is the global taxation of the US. Only two other countries in the world even attempt to tax extraterritorial income - Philippines and Eritrea - and they have been unable to enforce it. In all the world, only the US is so arrogant as to claim the right to tax foreign earned income and actually collect that tax. Frankly, I'm rather surprised that more international companies and investors haven't left.