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« John Kerry | Main | Throwing money at a problem »

January 18, 2004

Exporting corporation (not)

FOLLOW THE MONEY

Sunday, January 18, 2004
©2004 San Francisco Chronicle

What we said: It's unsettling and unacceptable that some corporations are dodging taxes by artificially relocating offshore. These "inversions" occur when a company moves -- on paper only -- to a place like Bermuda to evade taxes. Having a mail drop beyond the "water's edge" makes a company tax-exempt -- though its plants, workforce and markets are still on U.S. soil. -- Editorial, Sept. 8, 2003.

What happened: Not much. Some of the Democratic presidential candidates have been hammering the Bush administration for refusing to close such corporate tax loopholes. In response, the White House last week introduced a variety of measures to crack down on tax shelters, but the increasingly popular offshore loophole was not one of its targets. Congress has been equally timid about addressing these corporate tax-hideout schemes. An example of legislative spinelessness on this issue came in fall 2002, when leaders of the House of Representatives stripped out an amendment (sponsored by the late populist senator, Paul Wellstone of Minnesota) that would have kept companies using this offshore tax-shelter scheme from getting government contracts on homeland security.

What's next: Nothing, unless Congress -- and the Bush administration --

feel the heat from individuals who are tired of paying their share of taxes when corporations are using their accountants and influence to avoid taxes.

What you can do: You can find the name and contact information for your representative in Congress at www.house.gov.

Posted by P6 at January 18, 2004 09:40 AM
Trackback URL: http://www.niggerati.net/mt/mt-tb.cgi/35
Comments

When are people going to realize that corporations don't pay taxes? Corporations pass taxes on to us. People pay taxes. Legally created entities do not pay taxes -- they just tack it onto the prices you pay. When they raise corporation taxes, they are raising taxes on you.

Posted by Phelps at January 19, 2004 02:22 PM

Just a thought experiment:

Would you find it acceptable to live in a society in which you could freely choose any lifestyle you like if it didn't have a capitalist value system?

Posted by P6 at January 19, 2004 05:33 PM

A capitalist value system is the best one for ensuring that you can choose whatever lifestyle you like. It is the free-est system in the world.

Falun Gong can be practiced in Hong Kong, but not mainland China, as an example.

--note China is adopting some of the outward features of capitalism, but still has a long way to go.

Posted by Brian at January 21, 2004 01:41 PM

Also, on the subject of corporate taxation, Phelps is right, the cost of taxation is passed on to the consumer. But US corporations are competing on a global market. The US currently has one of the highest corporate tax rates in the world. When these costs are passed on to the consumer, it means higher prices. That makes US corporations less competitive on the global market, and that means higher unemployment for the plants and facilities that are still on US soil.

Maybe, instead of attacking corporations for leaving, we should address the reason they are leaving.

Posted by Brian at January 21, 2004 01:46 PM

A world in which I could live any lifestyle I want without economic consideration is essentially Locke's First World, and yeah, I wouldn't mind that at all.

Posted by Phelps at January 22, 2004 02:51 PM

Brian:

A capitalist value system is the best one for ensuring that you can choose whatever lifestyle you like. It is the free-est system in the world.

Fine, but is it a requirement for you?

As for the tax thing, when you gentlemen claim all corporate taxation is consumer taxation, that's a lot like saying all cows are grass. If there's nothing to tax in a corporation then the corporation has no value…something I think we'd all agree would be an absurd idea to set forth.

Posted by P6 at January 22, 2004 03:41 PM

All corporate taxation is consumer taxation, because corporations do not create wealth. People create wealth. That wealth is what is used to pay taxes. When a corporation pays taxes, that is an expense. When a corporation has an expense, I can do two things -- it can take as a loss, and transfer that cost to the stockholders (people) or it can pass that expense on in its prices to the consumer (people). Either way, people are paying the cost, not "the corporation."

Posted by Phelps at January 22, 2004 06:00 PM

It would be nice if the shareholders carry a legitimate share of the costs of running a society since they reap incredible benefits.

Posted by P6 at January 25, 2004 12:56 AM

The US currently has one of the highest corporate tax rates in the world.

Nice try.

Incidentally, the corporate tax rate in the US is 31.91%. Japan's was reduced (1999) to 27%; it had been higher than America's in previous years.

However, none of this really matters because the profits on enterprise in other countries are far lower as a share of revenues. Just compare the profits of Fortune 500 American firms with their counterparts on Fortune's Global 500 (list of 500 firms world wide). On the continent, European firms are evolving away from having been virtual state enterprises.

Posted by James R MacLean at January 25, 2004 04:36 AM