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To: elmatador who wrote (7400)	8/19/2001 11:47:16 AM
From: KyrosL	Respond to of 74559

>>That's because you can't easily pinpoint exactly where you count the 'ownership' of a given part of the Gross 'quasi-domestic Product. Every cent of the US GDP is produced in the US. If the US imports a shirt from China, only the markup above what the US pays China is counted in the US GDP.

To: elmatador who wrote (7400)	8/19/2001 12:37:50 PM
From: Ilaine	Respond to of 74559

>>Where is -accurately- accounted for the case of GM that has a financial arm that finances car dealerships and cars all over the world?<< That's a very good question. I just looked at the Federal Reserve's Flow of Funds Accounts, and it's not there. You pointed out two advantages to setting up an affiliated company offshore - lower overhead and the ability to take advantage of favorable exchange rates. There's a third reason - the money is not going to be reported in the US as income, because it's not subject to US taxation. Note that this is not the case for a US subsidiary company - income from a subsidiary is subject to US taxation, with a credit for taxes paid to a foreign government. An affiliate is a separate company from the US company, not under its control, a subsidiary is under the control of the US company. So to the extent that offshore companies are subsidiaries of US companies, their income is treated as US income, subject to a credit for taxes paid to foreign governments.