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Subj: Re: Joe The Plumber...
Posted: Sat Oct 18, 2008 at 01:08:54 am EDT (Viewed 924 times)
Reply Subj: Re: Joe The Plumber...
Posted: Fri Oct 17, 2008 at 11:46:02 pm EDT (Viewed 843 times)

> > The they I was referring to were corporations and people with wealth. They can both leave to go to different countries. A corporation would leave to go to a country with a much lower corporate tax rate. America currently has one of the world's highest.
> First, they'd have to convince their shareholders. And then their executives to pack up and move somewhere else. And their employees to move to another continent. And they'd have to deal with all the headaches and paperwork and logistical issues and money-matters associated with relocated an entire business. And they'd have to either headhunt in the new country or keep an office in the USA to recruit people as they need them. And they'd have to risk placing their future in the hands of a totally unknown governmental system (will the tax rate change? what are their foreign ownership rules? what about their work visa rules for the American employees?) when they're quite comfortable with this one and have a record of securing the tax breaks and incentives they want when they just contribute money to the right campaign.

It could be a simple situation where a company decides to manufacturer their products in another country, then sell the products to the US. Example: Chrysler builds cars in china and sells them in the US, whereas they use to just manufacture and sell them in the US.

Or the same situation where US companies manufacture overseas, and then sell the products in the US. Example: Emerson, a US electronics company, makes their products overseas, and sells them in the US.

Or they could sell off part of or all of their company to a company from another country. Example: Annheiser Busch was bought by InBev, a Brazilian/Belgian company.

Or it could also be a situation where an American company chooses to invest in a foreign company instead of a domestic one. And with our current tax system, it a company makes money in another country, it makes much more sense for them to spend that money in that foreign country then to bring it back to the US. It was a law/loophole created so that Us company would invest in foreign companies after WWII. But the current result is that US companies would rather invest overseas than in the US.

There are countless situations to get around most of those problems you mentioned. And if the incentive is there, that a company will figure out a way.

> It's a false threat. It's easy for them to move the grunt work, but to relocate an entire corporation? Not so much.

It's the same reason why companies move their headquarters from NYC to a much more favorable location.

"10 Big Businesses That Have Moved Their Headquarters Abroad to Pay Less U.S. Taxes"

A selection:

Cooper Industries Inc.: Cooper Industries, a company that makes electrical products and tools such as Halo and Lumière brand light fixtures, moved from Houston to Bermuda in 2002 and subsequently garnered $3.6 million in government contracts.

“We felt that American companies, based upon the tax laws that are written today, are clearly put at an economic disadvantage to foreign companies," said Victoria Guennewig, a spokeswoman for Cooper Industries, in defense of the company’s relocation.

Not sure what a false threat is. I'll assume it means empty threat. But since they did it, it wasn't just an empty threat.

> As for rich people moving? There are always reasons. But if taxes were the only reason, then Bill Gates and Warren Buffett would have no reason to stay. And yet they do. So the country obviously offers something in excess of its tax structure - something else is clearly more important to them.

So you are using the two of the richest people as an example? I can pretty much guarantee that not at least some of their money is held overseas, and that they have invested in companies overseas. Both would be simple processes to avoid paying the taxes on both profits and interest from those moves. But way to stack the deck against me.

The much more likely situation is that people will retire, and then move to a country that is much more favorable for them. Then they can invest in that countries economy. On a personal experience, I knew of an acquittance that simply packed up his things and moved to Costa Rica. He had his own business in the US, sold it and all his stuff in the US, and bought alot of land there.

Just using talking about corporations, the US has the second highest corporate tax rate of all major/developed countries. It's only behind Japan, but it's only a difference of .2%. And it's 10% higher than the average for major/developed countries.

And another link, just for fun.

Reason Why U.S. Companies Relocate Overseas


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