New tax threatens U.S. recovery
Proposed tax hike on international operations could delay economic rebound
By John Chen, chairman and CEO, Sybase
President Barack Obama has proposed to raise taxes on the international operations of U.S. businesses. There is one thing the proposal can effectively achieve: make the United States an even less friendly place to do business, and thus delay the economic recovery.
Chen worries higher corporate taxes will delay recovery of the U.S. economy
The current environment is dire to begin with. The U.S. has the highest corporate tax rate among developed nations. The latest Index of Economic Freedom by the Heritage Foundation ranks us an alarming 125th among 156 countries. We are one of the very few developed countries that still double-tax overseas income of our own businesses.
Even more discouraging, President Obama’s proposal aims to levy tax on international profits once the money is made. This is in contrast to the current practice where companies pay tax upon repatriating the profits. In either case, it comes on top of what they already pay the foreign country in which they operate.
The proposal also would limit the tax credit an international company could claim, whereas now we allow a tax credit equal to the amount of foreign tax paid.
Although intended to keep investments and jobs from leaving our country, in the long run the measures in the proposal will drive investments away, and kill jobs in the U.S.
On the micro level, it will make it even harder for global companies to run a profitable business, especially in this economic gloom. It's already an uphill battle to drive revenue growth, and now companies are to be burdened with heavier taxes. After all means to reduce operational costs are exhausted, layoffs will follow. There's no doubt that this will push the unemployment rate well into the double digits, from where it is now approaching 10 percent.
On the macro level, investments in the U.S. will eventually dry up. The intention of the proposal could be to make it less attractive to run a global business and therefore curb outbound flow of investments. However, the reality is that companies will find a more pro-business, pro-growth region in which to establish themselves..
OECD finds that the U.S. exerts a combined marginal corporate rate of 40 percent, a stark contrast to Europe’s average, for example, of 25 percent. Today, we have numerous American companies with a foreign arm. Tomorrow, these companies can choose to headquarter in a foreign country and create an American arm.
When we lose the confidence of our global companies, our economy will suffer. How severe will this be? The parent companies of our multinational corporations – the flagships of our international businesses – account for a quarter of U.S. private sector output; and employ almost one fifth of the total private-sector workers. Three-quarters of the R&D investments of all U.S. companies combined come from these parent companies.
The international tax modification represents not only a misunderstanding of the factors that drive the competitiveness of our economy, but also a protectionist undertone in the economic policies. When we attempt to limit the flow of investments, we hurt the confidence and prosperity of our businesses. And when that happens, we lose big time as a nation.
Chen is chairman and CEO of Sybase, Inc., an enterprise software and services company based in Dublin, Calif.
You get what you paid for, the fact that major companies do outsourcing is because they do get more out of it. That's just business.
So talk about outsourcing:
Person 1: A Chinese/Indian who spends 8 to 10 hours studying everyday since elementary school.
Person 2: A cool US guy who spend most of the time playing video games, going to theme parks, enjoying weeds and playing beer pong.
Who should get the job? Execuse me, who said "Everyone is created equal"?
Bottom line, if you don't want to lose your job, go work harder.
I don't doubt that US corporations don't nearly the marginal rate in income tax, but who cares? Taxes will be passed on in the form of higher prices and job losses, so I'm not too excited about seeing them "pay their fair share".
And why is the conversation always about the employees? So many people act like profits are entirely irrelevant. Every job forced to stay in this country is a hit on a share price or a product price. I don't want to see the stock market more in the tank than it already is. It's not all about the jobs. All of us are affected by having corporations that don't generate ROI for their investors or charge more for products and services, not just the evil, stinking rich.
I'm not thrilled about oursourcing either, but the private sector needs to come up with new ways to create jobs and not delude ourselves into thinking we can use the police power of government to keep jobs here. Maybe in the short term, but not in the long term.
The OECD website shows that of the 30 member countries, the US has among the highest corporate tax rates but it also shows that among those 30 countries US corporations pay the fourth lowest in corporate taxes as a percentage of GDP. The difference is exemptions and loopholes. Whining about high corporate tax rates if you are advocating eliminating the exemptions and loopholes is one thing, but keeping them while lowering the corporate tax rate is just another ripoff by corporate America. I haven't heard anyone advocate for lower tax rates and elimination of exemptions and loopholes.
This is all about one-world government run by a bunch of elitists. First and foremost, let's run the U.S. economy into the ground. What I'm really waiting for is the effort to eliminate guns from this country and how that's going to be spun.
I totally agree with Mr. Chen. The government does not create wealth; it redistributes it. Doing so, at excessive rates, as it is now and proposes to in the future, simply stifles growth and creativity. Instead, it should LOWER corporate and individual income tax rates, and money would flow into the government coffers. Unfortunately, most people in our government and most voters have a below-average financial IQ, so they actually believe in the concept of a free lunch.
James Jupiter, Erik T, and a few others are right. We can tax anybody, but theres no point on taxing if you just give them all the tax breaks and loopholes they want. And Outsourcing should be taxed 5 times with no loopholes. Thats the only way you're going to stop outsourcing, by making it cost to hire overseas than hire an americian. And while we are at it, cant we change it, that if a company outsources to other countries that they are no longer consider an american company? If you cant hire americans, then you shouldnt be known as an americian company….
talk about pouring water on a drowning man… This is waht Obama is doing with his tax increases. You all voted for him now your complaining. you got what you wanted. a cool guy as president Coll but an econimic infent
I just moved to Singapore from NYC and am already in awe of the government's efforts here to promote entrepreneurship. . It is disappointing that President Obama has not yet introduced any far reaching economic decisions to pull the nation out of the worst crisis in seven decades. I sincerely feel all international relations and partnership building can wait until after the economy is back on track. It is also hard to believe that America does not have a credible 'Entrepreneurship' visa (as opposed to the foreign worker visa) to attract bright entrepreneurs who will invest money and create new jobs in the US. Singapore, for example hands out Visas to any one with a briliant idea and some cash to invest. Look at what this country half the size of NYC has done in terms of economic progress !
It may just be as simple as Econ. 101: if a given company, currently subject to US law, can find a better deal in some other country, it will just move there. It would presumably have to be quite a bit better, but, as US law becomes ever more punitive, we could start seeing this happen more often.
The fact that so many companies still operate out of the US is probably due, not to how business-friendly the US is, but how relatively business-unfriendly most other countries are. It's as though various contries are "selling" business-friendliness to companies to try to convince them to do business with in the respective country (the payment). If other governments can offer a better "product" than the US, then companies will "buy" their "product" rather than America's.
This is a well written analysis. The author really has insights on global economy and vision on American business. To dig this country out of recession, jobless recovery is not sustainable. Heavier tax will make this fragile recovery process in jeopardy.
Excellent analysis. Totally agree with Mr. Chen. Heavy tax can reduce competitiveness of American business in this global economy.
America is the world's consumer. They'll pay American taxes on the same amount as they do now…irrespective of where they want to land.
A great article and you are an intelligent BUSINESSMAN. If you had applied the same intelligence in studying Obama's political background, you would be aware that he is a ultra-leftist. He is doing exactly what the Saul Alinsky school of ideology believes in. Read up on it and know your future.
Show me a company in America that's actually succeeded in outsourcing their way to prosperity, to higher actual profits. You can't — they don't really exist, over the entire economic cycle. The biggest outsourcers and users of H1-B happen to be amongst the worst performing businesses over the past decade. That's not a coincidence.
From what has been recently reported, companies do not currently pay taxes on operations outside the U.S.
Vicki – cutting taxes didn't increase the debt — how else can you explain Obama racking up the debt at levels exponentially higher than any other President in history? Washington's inability to reign in spending is what has caused the debt.
Nate – this "clown" as you refer to him runs one of the few companies in the USA whose stock is HIGHER now than it was last year. I suspect he knows just a LITTLE bit more about running a business than you ever will…
How long will this circular argument go on ? Everyone knows that large corporations have platoons of lawyers in order to avoid taxes and exploit tax law loopholes. So it doesn't matter if the corp tax rate is 99%. I suggest we lower the tax rate and end the loopholes. That should please everyone, right ?
You people just dont get it do you, you really have not a clue.
It is frightning that Americans in this country can be so blined to what is happening in their own country.
Let me explain with some knowledge for you to eat.
As reported on CNN. The US hit the $168 BILLION DOLLAR mark in outsourced jobs in 2007.
Also reported by CNN. The US outsourced $19 BILLION DOLLARS worth of jobs in 2008. The US is now way past the $200 Billion Dolar mark in outsourced jobs.
Not 200 Million, 200 BIILION.
IBM outsourced 74,000 jobs just to India and are currently outsourcing to over thirty countries.
A Indian outsourcing company in Inida has a yearly revenue of $40 BILLION DOLLARS A YEAR and employes 52,000 people,they use to be American jobs.
JP Morgan Chase outsources $250 to $300 MILLION a year in jobs and projects. After getting $45 BILLION in TARP money, they announced they are increasing outsourcing 25%.
Bank of America has done more than that.
What I have just described is only 3 Companies. Mulitply that times thousands and then add all the small companies who are having everything made in China or Mexico.
WE ARE KILLING OURSELVES and the Economy is not going to get better because if you do the math the equation just does not add up for the economy to move forward.
Our Government can draft a 2 Trillion Dollar Stimulus Bill and pass it in a week but they cant stop outsourcing or bring jobs back nased on sef preservation.
BS
Whole industries have been strip mined from this country. I remember the Govermentand Executive use to argue that outsourcing will create jobs here, so much for that opinion.
This is simple math, get people back to work and the economy moves forward.
Keep outsourcing and a Depression is a sure thing. Hell most of the people I know with Colege degress have lost their jobs and not due to bad business, it's due to offshoring.
YOU people better wake up, becasue it may you next or your spouse or your home or your parents.
September 12th a March on Washinton has been scheduled they asked for 1 Million to attend.
The first day 2 Million RSVP'd now it is up to 6 Million that are planning on Marching.
Fellow Americans, HELL is comming to dinner.
What does Mr. Silicon Valley know about economy?
Something he heard over a starbucks while his Ferrari (or new prius, whatever) was parked outside?
Go figure…
This is ABSURD.
1.) You are misrepresenting the findings.
2.) In an age of increasing consumer sentiment of corporate responsibility and equalizing environmental factors, one can only exploit foreign markets for so long. Competitiveness demands a balance and harmony.
3.) Large corporations currently pay ZERO taxes. This measure will simply tighten (but not close) one of the major loop-holes, bringing the real marginal tax rate from .1% to .5%.
4.) The true cost of most tax is borne by the customer or the community. Businesses, particularly international ones only exists to make a profit. Those that do not exist to make a profit, do not exist. They do not absorb any costs, and pass the buck every time.
5.) There are other incentives to decrease one's corporate tax liability; primarily by reinvestment in assets, infrastructure, research, employment, and CHARITY; rather than profit-taking.
6.) The jobs are already gone. Businesses may renounce their American incorporation, but they will still do business here.
7.) International pressures change the economic landscape daily. The American military and economic industrial complex is still sufficient enough to maintain bargaining power abroad – even if our money can't.
8.) In reference to point #1, Corporate social; responsibility is non-existent. If corporations leave a power vacuum, more competitive and responsible industries will fulfill the latent demand.
9.) Your assumption is predicated on the belief that business exists to provide the least amount of true tangible value for the highest real cost to the consumer. To argue otherwise is to argue in favor of closing this loophole. The corporations who stand to lose from this are anti-competitive conglomerates who exploit workers, resources, and communities. All of the competitive businesses that provide true value for low cost stand to profit substantially, by operating on a more level playing field; particularly with respect to cost. This decreases the incentive to move abroad simply to exploit inexpensive or forced labor.
You are the one who misunderstands the factors that drive (or should drive) competitiveness in our economy. It is not a marginal tax increase.
My assessment is that taxes do not need to be "raised" rather the current rate needs to be PAID. This half-witted attempt at closing this gap is the first step toward that goal.
Your analysis destroys communities. Corporations should pay slightly more taxes and individuals should pay exponentially less.
There must be new curbs on US companies taking their product manufacturing off shore.
Failure to do so, will assure the permanent loss of jobs in the US, and there will be no recovery possible.
On the other hand, there can be new incentives to manufacture within the US, as well.
Jobs creation, at the moment, is the non-existent portion of the recovery plan.
Did this guy really just get information from the Heritage Foundation. Its a conservative thinktank of course its going to make taxes look bad. Look at the real facts please!
Wow what a garbage this article is!! Tax these companies who eliminate US jobs and outsource work and abuse the system so that these CEOs get fatter paycheck where as average US worker gets poorer.
I cannot understand how a reputable news organization like CNN published this garbage article from a greedy CEO whose sole intention is profit through outsourcing.
Why do we continue to demonize the only entities that "creat jobs" in this country?
Do you think the government is going to provide for you when there is no one left working to pay the taxes that are required for its very existence? Is somebody selling stupid pills?
My company has several plants overseas in Mexico and China. the Chinese plants do not import products back to the United States. The products are produced in China for the Chinese market. They are there because it makes sense to have a plant in the market you are serving. We cannot export everything over there and be competitive. However, WE CAN produce in China and import back into the U.S. Did that dim light bulb get any brighter in anyones head here? This is the dumbest legislation I have seen come out of this administration to date and there has been several. Do these bafoons understand anything about business?
If your idea is to destroy all those evil companies we have left in America then go for it. I hope that every moron that supports this sees his/her job moved to their companies new headquarters and plants in a foreign country. Don't think it will ever happen? It's just business, nothing personal. I sell the product so I could care less where it is made. I will still have a job, you however will not.
Then you will realize that it is business that creates jobs and not the government. Tough lesson to learn after your in the welfare line and they tell you "oops" guess what, no more money left.
After WW2, we had 70-94% upper-income tax brackets, including on capital gains, much greater corporate taxes, and enormous prosperity for the United States middle class for decades until taxes were lowered starting with President Kennedy, then Reagan. No one complained then about high taxes! We have seen since Kennedy/Reagan what lowering taxes on the wealthy and corps does: increases the national debt to unsustainable levels and shifts the burden to future generations. I say, put back those tax brackets and restore everything to post-WW2 levels. Get this national debt paid off! Tax them more, not less! It only hinders profits, not recovery.
This debate is useless. Corporations do not pay taxes. That money they do send to the government is paid for by you in the form of higher product costs. So if you are for soaking the corporations, you are for soaking yourselfs. End of story.
This post is ridiculous. First of all, there's citing a study (Index of Economic Freedom) and completely misrepresenting the findings. The US is 6th (1st being the best) on the list. 6th!
Second of all, yes, Obama is going to be raising tax rates on "taxable" corporate income. That has to happen, because corporations keep exploiting more loopholes to keep the total amount of tax they pay down. The amount of tax paid by corporations in the US is small, NOT large, as Chen would have his readers believe.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=263
Even on a US scale, our corporate tax contribution now is historically lower than average.
Finally, anyone with a brain larger than a pea (apparently not Chen) can understand that in a country with low personal tax rates (yes, bozos, we do have low personal tax rates here!), you have to get corporations to contribute. European countries may have lower marginal corporate tax rates, but they have much higher personal tax rates. If you put the two together, the USA still stacks up favorably as being a low tax state, relative to GDP:
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
This is just libertarian nonsense. If this clown is running Sybase, I'll make sure to short some of their stock at my earliest opportunity.
Corporate taxes are at extremely low levels. And the current structure encourages outsourcing of jobs and keeping the money overseas. That type of corporation sees no responsibility for the well being of the United States — it is just a handy place to do business at the moment.
Shame on you, Fortune, for allowing the CEO of global software company to provide "commentary" on an economic issue. It's shamelessly self-serving on his part, and shamefully pandering on your part.
Why is government’s solution to just raise taxes?! Why aren't we more concerned that they don’t do more to cut costs and spending! Gov’t has just gotten to fat and its time to trim it! Gov't represents interest parties not the people, which is why health care (Medicare) has gotten where it is!!! We no longer have taxation with representation and I for one am sick of it. It is ridiculous to expect the so called “RICH” (families making over 250k, what a joke) to cover everything. Everyone should pay their share, get rid of all the loopholes, simplify taxes and distribute the burden across companies and the people…including those in Gov’t.
Corporations that eliminate domestic jobs, and totally exploit foreign workers – to the benefit of themselves and Wall Street, do not need a sweeter tax deal.
I wish everyone would quit complaining about corporate tax rates being so high. When corporates zero out their net income and pay zero income taxes, the cry for lower corporate taxes becomes meaningless.
Per NYTimes article, 08/13/08, 2 out of 3 U.S. corporations has paid essentially no taxes over a 7 year period from 1998 to 2005.
Corporate "citizens" need to understand they are in this boat too with private taxpayers, and pay their fair share and quit looking for government "welfare" in the form of no taxes or tax deferrals.
[...] a profit in a corp or persons pocket…… New tax threatens U.S. recovery July 16, 2009 8:45 AM New tax threatens U.S. recovery – Fortune Brainstorm Tech [...]
Guess what. There's nothing you can do about it, so go on about your life. BOTH current and past administrations make poor choices, and no one should be surprised. The sad thing is that we, and this planet, are potentially a rare phenomenon in this universe. Yet, with all the logic and reason we as humans possess, we're always done in by our own greed in the end. People are inherently selfish and only out for themselves. We will only continue to fight over land, religion and of course money. Nothing new there. Get used to it and try to live the remaining days of your lives doing something meaningful. Thank you, good night.
Mr. Chen's comments are true but inaccurate.
Corporate tax rates are high in the US compared with other countries. However, corporate tax loopholes are high also. US corporations don't effectively pay higher taxes because they are allowed substantial writeoffs.
US corporations pay foreign taxes and gets a tax credit for taxes paid. This is also how it works for US investors. This is not double-taxation.
US corporations are moving overseas mainly because foreign labor costs are lower and regulations are less onerous and not because of high corporate tax rates.
Well, when you elect someone who has no experience and doesn't understand economics or even learn from the past (anyone remember Obama's debate with Hilary, Charlie Gibson moderating, when Gibson called him on wanting to raise capital gains tax to their highest level? look it up) this is what you get. He is destroying our country.
hey "The Lonely Libertarian" why don't you try to propertly read the website…the U.S. is sixth overall in economic freedom according to the referenced website…the author of the article isn't talking about economic freedom, it's amazing how difficult interpreting given information is…just another reason the U.S. is in a long state of decline only to be overtaken by China.
While I don't think it is fair for corporations to be double taxed, I am against them avoiding taxes by using tax havens. I also think Mr. Chen should note not only the average corporate tax rate but also the average EFFECTIVE rate that multinationals pay. With all of the loopholes written into the tax law, I doubt many (if any) multinationals are paying 40% in taxes. Is he willing to agree to PAY 25% in taxes and give up ALL of the loopholes?
The jobs ALREADY left and the American middle class is left holding the bag while our 'patriotic' corporations find ever more ingenious ways to avoid paying their fair share of the cost of maintaining the civil society that makes their success possible in the first place.
ENOUGH. Since you seem to care more about your money than you do about your country, go ahead and leave. You corporate vampires have already done more than enough.
Where were you people back in Nov? I saw this disaster coming, why are you just wising up.
Obama is the death nail of this country. Let's hope you all remember that this coming election cycle and again, in 3 1/2 years from now.
John said: "The rich fools who read these articles helped elect Obama, what did you think was going to happen?"
————-
Ha, ha, this is so true…I quite often wondered why would super rich elect someone who is clearly against them?? I bet the author of this piece voted for Obama too, and now he, like many others, is saying: "Whaa, Whaa, What happened?" Ha, ha, enjoy!
P.S. To all wealthy democrats: if you feel guilty about your wealth, please donate more- instead of electing an empty suit teleprompter president, so that he can fulfill "a changed world" ideals.
Does CNN even bother to fact check this garbage? The specific line I take issue with is the following:
"The latest Index of Economic Freedom by the Heritage Foundation ranks us an alarming 125th among 156 countries."
Let us ignore, just for a moment, that the Heritage Foundation is a self-described conservative think tank committed to deregulation. I briefly looked at the study Mr. Chen cites, the Index for Economic Freedom and came to different conclusions. For example, the United States ranks #6 in terms of overall economic freedom. If you explore the data further, you will notice that the US is in the top 20 in "Business Freedom," "Trade Freedom," "Investment Freedom" and just about every category except the one the author cites "Fiscal Freedom." Who might the top ranked countries be in "Fiscal Freedom"? In order, from top down: Bahrain, Kuwait, Qatar, United Arab Emirates, Saudi Arabia, Oman. I'd rather not be in this company.
CNN should take this garbage down and cite the real conclusion of the study: The US is not #125 but #6 in Economic Freedom (according to the Heritage Foundation). See for yourself: http://www.heritage.org/index/Ranking.aspx.
American companies leaving for more friendly environments is exactly what will happen. Soon to follow will be the productive members of society.
Ask California how well eroding your tax base works in the long run.
"I looked at the link to index of Economic Freedom and when I view the countries the US is ranked number 6, not 125th."
-Posted By Jim, Clay Center, ks: July 16, 2009 11:56 AM
John Chen is referring to the US being 125th out of 156 in terms of corporate tax rates. This is just one of many pieces of data compiled to determine the overall US ranking of 6th.
Hey don't knock NAFTA, I was on unemployment when I lost my job 10 years ago! LOL, we have learning nothing!
Come on people war against business? Did the Bush policies really work or are all of you in a fantasy? Also Mr. Chen raising taxes would have nothing to do with your operating expenses and having to cut cost etc. I thought an income tax was on profit after expenses?
Great article some facts a bit off but in whole very accurate. Add in the Healthcare taxes and why would business stay here? Better yet watch the layoffs and yes people Costs of goods/services will be increased to cover their costs. Thank You for absolutely nothing Obama.
Total bullcrap! Companies, like Wolverine World Wide, exploit every loophole and screw the communities that they operate in. For instance, why would a "Michigan company" be registered in Delaware when their headquarters is in Rockford Michigan? Why??? To not pay their fair share of taxes. They take (demanding tax breaks or outlays for infrastructure) but do not give. Wolverine is not unique… The jobs are leaving, and ever since we gave corporate america a free ride the jobs have left faster than ever.
Our State and Country need to think of the good of the people and not gravel for an occasional breadcrumb of goodwill from the "International" companies.
Let's talk straight! We're in a depression. The value of our dollar has been taking a dive for the past thirty or more years. The reason? Why would the United States, when it enjoyed one of the highest standards of living, buy into 'Globalization'?
Jim you didn't read the piece correctly. The 125th ranking is only on corprate taxes. Anyway we should be first in economic freedom not 10th behind places like Hong Kong China etc.
We have a high tax rate, but does anyone actually have to pay it after all the shelters, loopholes and avoidance techniques. I think you want to look at the net rate after all these shenanigans take place. After that do we still have the hightest "rate"?
Just another lame brained idea from our leader. Thats what we get when we elect a man who has never had a real job. Any 18 year old working at Burger King knows more about macro-economics than our president. Is ignorance an impeacable offense? He makes Sarah P. look like Margaret Thatcher.
Typical scare tactic — "no one will want to operate in the U.S." Unfortunately for the greedy multinationals, nothing could be farther from the truth. The U.S. is the largest market in the world, by far. If they want to leave — good riddance. Don't forget to take their top brass and their families to China and India with them when they leave.
I was thinking the same thing. Companies will headquarter in other countries. This Administration seems to be determined to stamp out middle-class America by killing jobs.
I looked at the link to index of Economic Freedom and when I view the countries the US is ranked number 6, not 125th.
Why can't we simply do a consuption tax and be done with this nonsense? No income tax. Sales tax ONLY. You spend, you pay taxes – regardless of where $$ was earned. Gov't can send $2500 to every person with a pulse. This eliminated the 'regressive' aspects of a sales tax. Imagine earning $1000 and getting a check for $1000. Nice concept, huh…
Excellent analysis. The situation is dire and will undoubtedly deteriorate even further as the current adminstration continues on the path to higher taxes.
The US is transitioning into a Marxist country and it is important to understand that there are economic consequences as this occurs.
However, it is exactly what the current governtment wants.
Sad but true, but what else can we expect when the foundation upon which the liberal tax & spend Democrats build is based on a massive redistribution of wealth be it indivuals or corporations. Be prepared for more of the "Ready, fire, aim" misguided approach of our President and Congress.
Great piece, however, I think the current legislation considered is an attack on so called tax haven jurisdictions, where multi- nationals set up their international sales offices and drop profits into these juirsdictions where it is never taxed. How can Chen issue such a statement with a straight face, when most 1st world nations have tax teaty arrnagements with the USA to prevent the double taxation he refers to. By the way does Sybase have sales offices in the Caymans……..
Maybe its just me, but 125/156 would put is AMONG those nations with the highest corporate tax rate – but certainly not the highest. While taxes are one of the factors that would impact the US in terms of economic recovery, you're painting it as the primary driver. The US has had exceptional tax rates for years yet foreign direct investment and a strong economic base have facilitated the US being able to compete in the world market just fine. Considering that the US fares better than the UK, Japan, France, Germany, Spain, etc. when it comes to fiscal freedom – I'm not sure that the assertion that tax rate is going to dampen economic recovery is well supported.
Amen. One wonders whether President Obama is simply ignorant of basic economics or if he is intentionally destroying our economy. Either way, it's incredibly scary.
Although it is unclear where precisely the "breaking point" is, I am worried that the protectionist policies that are being proposed could hurt growth in the long run. There have been some long-standing policies that have encouraged overseas expansion and I think those should mostly be eliminated (i.e. if it is profitable for a business to be global so be it but actively encouraging them to go overseas makes no sense in today's climate).
I believe that the larger issue is lowering labor costs in the U.S. while improving productivity. Ofcourse health care reform is one of the most critical issues in resolving this(though I don't entirely agree with the administration's proposals for reform; http://www.geocities.com/mcorazao/health_care_crisis.pdf). Beyond that reducing obselete industry susidies and providing more subsidies to encourage research and development in key industries would help as well.
This scenario may apply in the case of your company but the biggest companies are using loopholes to avoid paying taxes and leaving the profits abroad anyway. Some countries would like the U.S job drain overseas to continue but I think it's about time these companies do some profit sharing with the consumers that have gotten them where they are and if that takes the government intervening so be it.
Why is anyone surprised by this? This is what you get when you elect a president who's positions show he will declare war on business.
It should be noted that in the NAFTA zone, companies can relocate to Canada – a less radical move than to the Caribbean. Tim Horton's Donuts, a Canadian firm acquired by Wendy's and then spun off, moved its incorporation back to its founding country based on lower taxes. The US advantage of more aggressive capitalization, despite the higher rates, was not something that could benefit Tim's in staying.
Why is there never any talk about companies having to pay a price to play in the USA. If companies do not want to sell products here, I suggest that they go elsewhere. I am sure that other companies will be happy to start up here and take this business. Instead all we get from these corporate CEOs and Wall Street is that the US worker has to accept less and that their taxes are too high. Why is the solution to every problem that companies have is to layoff the workers that had no part is the decisions that led the company into financial problems while the people responsible got huge bonuses.