Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (3432)	5/6/2009 4:14:26 PM
From: TimF	Respond to of 3816

This isn't a benefit, its a cost. Increasing taxation of income earned overseas by companies with headquarters in the US, will over time encourage more of them not to have headquarters in the US, so its practically a bad idea. And its not a good idea in terms of justice or fairness either. The US government isn't the government of the world and it shouldn't try to tax the rest of the world. Most countries do not. If your a citizen of France or the UK, and you don't live in those countries you don't pay their income taxes. If you set up corporations in other countries, your company pays taxes in those countries. Only the US is on this measure arrogant enough to think it has a right to grab income from across the world this way.

To: tejek who wrote (3432)	5/6/2009 4:17:44 PM
From: TimF	Respond to of 3816

Securing Jobs or the New Protectionism? Taxing the Overseas Activities of Multinational Firms Mihir A. Desai Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER) March 20, 2009 Harvard Business School Finance Working Paper No. 09-107 Abstract: Tax policy toward American multinational firms would appear to be approaching a crossroads. The presumed linkages between domestic employment conditions and the growth of foreign operations by American firms have led to calls for increased taxation on foreign operations - the so-called end to tax breaks for companies that ship our jobs overseas. At the same time, the current tax regime employed by the U.S. is being abandoned by the two remaining large capital exporters - the UK and Japan - that had maintained similar regimes. The conundrum facing policymakers is how to reconcile mounting pressures for increased tax burdens on foreign activity with the increasing exceptionalism of American policy. This paper address these questions by analyzing the available evidence on two related claims - i) that the current U.S. policy of deferring taxation of foreign profits represents a subsidy to American firms and ii) that activity abroad by multinational firms represents the displacement of activity that would have otherwise been undertaken at home. These two tempting claims are found to have limited, if any, systematic support. Instead, modern welfare norms that capture the nature of multinational firm activity recommend a move toward not taxing the foreign activities of American firms, rather than taxing them more heavily. Similarly, the weight of the empirical evidence is that foreign activity is a complement, rather than a substitute, for domestic activity. Much as the formulation of trade policy requires resisting the tempting logic of protectionism, the appropriate taxation of multinational firms requires a similar fortitude. papers.ssrn.com gregmankiw.blogspot.com