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Politics : Don't Blame Me, I Voted For Kerry -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (10078)	3/26/2004 2:02:14 PM
From: redfish	Respond to of 81568

There is not a tax credit for foreign profits, there is a tax credit for foreign taxes paid. The idea is that if GE owns a plant in Ireland, and pays taxes to Ireland for the portion of its profits that are attributable to that plant, it shouldn't pay tax again in the US for those same profits. This method of taxation goes back a long way, through both repub and dem presidents. It was a huge issue a while back, during the George I and Clinton periods, due to transfer pricing concerns, particulary the enormous "Aramco advantage" trial. While the US needs to be vigilent re transfer pricing, the present scheme is the only way to do business on a global scale. The only other real issue in international taxation is whether profits are US-source or Foreign-source. Here is the problem with transfer pricing and US-source versus Foreign-source. Acme builds widgets through a subsidiary in Costa Rica and sells them in the US. Costa Rica gives Acme special tax treatment due to the jobs it provides. Acme Costa Rica builds the widget for $10 a piece, and sells them to Acme US for $50 a piece. Acme US then sells them on the market for $55 a piece, so the US treasury only collects taxes on $5 of profits. This is obviously a scam, really Acme Costa Rica should have sold them to Acme US for $12 a piece, but that would have resulted in higher taxes. The profits are clearly US-source, but for a bit of obfuscation by the multi-national company.

To: JakeStraw who wrote (10078)	3/28/2004 7:28:11 AM
From: tonto	Respond to of 81568

I agree. I welcome any tax cuts that make sense, but this is a lot of window dressing. A smart political move, but one that will not accomplish its goal...unless one considers what the real goal is...votes/ "That is a step in right direction," said Engen. "Currently U.S. corporate income tax rates are the second highest among major industrialized economies, behind only Japan. That's one of the reasons why companies often times want to keep their profits and invest in other countries with lower tax rates." But both Engen and Hederman said they doubted Kerry's proposed changes in overseas tax policy or the tax credit for hiring would have much effect on U.S. hiring. "Given the current political environment of greater protectionist feeling, it (a new international tax policy) might be politically saleable," said Hederman. "Is it a good idea? That's a different question. We'd be hurting competitiveness of American companies overseas."