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Politics : I Will Continue to Continue, to Pretend....
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To: Sully- who wrote (1899)4/18/2004 3:08:20 PM
From: Sully-   of 35834
 
Kerry proposes tax cut for Heinz?

Was there a shred of truth to the charge "it's all about oil?" Is there any truth to the trope "tax cut for the rich?" Was Steve Forbes really pushing a flat tax to lower his own taxes?

And what about this new wrinkle on the Kerry tax plan:

The Kerry team...added a loophole [to the Kerry tax plan]. 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.

Some industries, like food production, [typically] locate a separate plant in each country that they serve. Chief among these is Heinz, which owns 57 plants outside of North America...

Heinz is so successful at capturing local markets that, according to form 10-K, almost 84 percent of its income from continuing operations came from foreign markets in 2003. Accordingly, the impact of the Kerry plan on that company's value would be tremendous. If we assume that deferring U.S. tax on their foreign income saves them the difference between the U.S. tax and the average foreign tax, then that adds up to annual savings of about $43 million. With a P/E ratio of 19.35, that means that absent the loophole, the firm's market value would drop by about $832 million upon passage of the Kerry tax plan. Assuming that the Kerry-Heinz family's share of the company is four percent, which is the upper limit of what has been reported, then this loophole saves Mr. Kerry's family around $33 million. It is easy to see why they might support this loophole, but hard to see why anyone else would.
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