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#102 Aug 09 2011 at 5:20 AM Rating: Decent
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As you say, this is a mistake. Yet, despite this, there are many on the left who argue that the rich aren't "paying their fair share" and want to raise taxes on the highest bracket (and on no-one else). When conservatives say that we should correct that mistake, they are demonized and attacked for wanting to make the poor pay for tax cuts for the rich (or some similar rhetoric).


the problem is that it's flawed at both ends. No one should be not paying taxes(except in such circumstances as I mentioned before), but those with more should pay a higher percentage. But the way it is is that those at the lowest end pay nothing, those at the highest end pay less than they should. Making the problem worse is that the Democrats think that some should be exempt and the rich should pay more, and the Republicans think in two ways. First, they act like all taxes need to be lowered(they don't) and are bad(they're not), but on the other hand, they also argue that those not paying should be(and they're right), but still argue for lower taxes for the rich.

The reality is that to fix the system, you are alienating a lot of voters regardless, so nothing will ever be done unless both sides can agree to fix it in the necessary way. But that will never happen, everyone puts their respective party ahead of what's right. In the long-term, things would be better if the system was fixed, but all anyone cares about is the short-term. This is why things are getting worse. No one is thinking ahead.
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#103 Aug 09 2011 at 8:28 AM Rating: Decent
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You likely think it's cute to quote something Kachi said, even though it's demonstrably false, but the only way you'll likely add something intelligent to any discussion is if you actually know what you're talking about.


Which raises the question of whether or not you'll ever be able to add something intelligent to any discussion Smiley: tongue

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Hyrist wrote:
Ok, now we're going to get slash fiction of Wint x Kachi somehere... rule 34 and all...

Never confuse your inference as the listener for an implication of the speaker.

Good games are subjective like good food is subjective. You're not going to seriously tell me that there's not a psychological basis for why pizza is great and lutefisk is revolting. The thing about subjectivity is that, as subjects go, humans actually have a great deal in common.
#104 Aug 09 2011 at 8:35 AM Rating: Excellent
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Plus, if anyone honestly thinks that taxation is even substantially holding them back, go to a nation with no taxation and you'll be free at last. If the tax-bitchy in this country had an ounce of perspective they'd realize that they're just bent out of shape because they hate writing a check once a year (or in many cases, not getting a big enough one back), not because writing the check has any meaningful negative impact on the way they live.

The irony is they're a prime example of money not buying happiness because they already have it and they're still pissy just because they have to give a little back. They want more and more even though it won't make their lives any better and it'll make the lives of a lot of people with far less means than they have significantly worse off.

Fuck that. I'm happy to pay my taxes.
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Hyrist wrote:
Ok, now we're going to get slash fiction of Wint x Kachi somehere... rule 34 and all...

Never confuse your inference as the listener for an implication of the speaker.

Good games are subjective like good food is subjective. You're not going to seriously tell me that there's not a psychological basis for why pizza is great and lutefisk is revolting. The thing about subjectivity is that, as subjects go, humans actually have a great deal in common.
#105 Aug 09 2011 at 8:39 AM Rating: Good
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gbaji wrote:
When you take from "the rich", you're really just taxing your own potential employment.


Smiley: facepalm

Saying this over and over doesn't make it true, gbaji. Taxing rich individuals has no effect on employment.
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#106 Aug 09 2011 at 8:48 AM Rating: Good
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Job monopolies, etc. Rich people don't need to hire new employees, and you have to be an idiot to think that expanding is always fiscally prudent, even looking past the fact that not every financially secure person is motivated to increase revenues. Many people just stop once they get to a certain level of wealth and decide it's no longer worth it... that is, unless they have to make more money to reach that level, perhaps by some method of taking that money so they don't just sit on it and stagnate productivity. Hmm, if only there were such a way to keep rich people's money circulating...
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Hyrist wrote:
Ok, now we're going to get slash fiction of Wint x Kachi somehere... rule 34 and all...

Never confuse your inference as the listener for an implication of the speaker.

Good games are subjective like good food is subjective. You're not going to seriously tell me that there's not a psychological basis for why pizza is great and lutefisk is revolting. The thing about subjectivity is that, as subjects go, humans actually have a great deal in common.
#107 Aug 09 2011 at 8:55 AM Rating: Good
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Belkira the Tulip wrote:
Saying this over and over doesn't make it true, gbaji.
You're wrong. Pic related.
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#108 Aug 09 2011 at 10:39 AM Rating: Good
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The other problem with the idea that the widow living on a pension should pay the same amount as Warren Buffet is it would be impossible to run the government on the amount of taxes you collected that way.

Either you would have to tax the widow for more than she can afford, or you would have to have to have the tax rate so low you couldn't afford to do have any sort of healthcare, education, military, roads etc.

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#109 Aug 09 2011 at 7:05 PM Rating: Decent
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Driftwood wrote:
the problem is that it's flawed at both ends. No one should be not paying taxes(except in such circumstances as I mentioned before), but those with more should pay a higher percentage. But the way it is is that those at the lowest end pay nothing, those at the highest end pay less than they should.


I agree with the first part, for the whole "everyone should pay something", and "don't make it easy to buy votes" reasons given earlier. I disagree with the later bits though, and I'm unsure why you think this. It sounds like just a knee-jerk assumption IMO. If your statement were true (that both groups needed to pay more), then this would indicate that we were just not collecting enough taxes at all.

But aside from just the last few years (in which revenues are down because of the economic issues, and not because we changed tax rates), the existing tax rates were sufficient to provide similar amounts of revenue as we've collected historically. In 2007, the last year before the bubble burst, revenues were 18.5% of GDP. This is in the top 25% bracket in terms of relative revenue over the last 40 years. Only 9 years had higher revenue rates over that 40 year time period.

So we were/are taxing "the rich" sufficiently to generate historically equivalent amounts of revenue. Absent short term economic woes. I just happen to think it's a really dumb idea to fix a short term problem with a long term "solution", which will likely cause additional negative effects down the road.

Do you have some reason other than revenue to argue for why those with more should pay higher tax rates? Because I'm not seeing it, and the data doesn't support it.


Quote:
Making the problem worse is that the Democrats think that some should be exempt and the rich should pay more, and the Republicans think in two ways. First, they act like all taxes need to be lowered(they don't) and are bad(they're not), but on the other hand, they also argue that those not paying should be(and they're right), but still argue for lower taxes for the rich.


See, this is what I mean by rhetoric. Republicans don't argue for "lower taxes for the rich". We argue for lower taxes for everyone. The Bush tax cuts lowered tax rates for every income bracket, not just the rich. The GOP isn't singling out the rich for tax cuts. The Dems are singling out the rich for tax increases. Opposing that targeting of the rich for higher taxes is not the same as arguing for lower taxes for the rich. That's just an incredibly unfair argument to make.


Quote:
The reality is that to fix the system, you are alienating a lot of voters regardless, so nothing will ever be done unless both sides can agree to fix it in the necessary way. But that will never happen, everyone puts their respective party ahead of what's right. In the long-term, things would be better if the system was fixed, but all anyone cares about is the short-term. This is why things are getting worse. No one is thinking ahead.


I would argue that conservatives are looking ahead. It's just a long road to travel to get the right solutions put in place against an entrenched liberal base which believes innately that the rich are somehow getting a free ride and have to be punished with higher taxes no matter how much the facts don't match. It's the left which plays politics with tax rates far more than the right. Again, look at which side is singling out groups for higher/lower taxes. Look at which side is arguing for simplified tax codes, and/or even flat (or more flat) tax systems. That should tell you all you need to know in terms of which side is using tax rates as a lever for political gain.


This is not about "both sides" being greedy. It's about one side being greedy, and the other side trying to fight to get people to not buy into the greed. It's about conservatives trying to get people to realize that the short term benefits the left offers them come at a price. But that's a hard argument to make against simplistic rhetoric like "The GOP is trying to cut your benefits!" and "The GOP is stealing from the poor to give to the rich!". That's the biggest political hurdle in all of this. IMO (and I'm obviously biased), it's pretty darn clear which side is doing the right thing.
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#110 Aug 09 2011 at 7:06 PM Rating: Decent
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xantav wrote:
Gbaji wrote:
I think it's quite easy to show evidence that wealth held in the hands of big business and their investors does do exactly what conservatives say it will. It creates jobs, it grows the whole economic pie, and it brings better and more affordable life-status improving products to consumers.


Now, are these jobs that are made available in the US? Because what I seem to see is that as big business has increasing profits, they slash the american workforce to make even more money.


I assume you have data to support this claim?
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#111 Aug 10 2011 at 11:09 AM Rating: Excellent
gbaji wrote:
xantav wrote:
Gbaji wrote:
I think it's quite easy to show evidence that wealth held in the hands of big business and their investors does do exactly what conservatives say it will. It creates jobs, it grows the whole economic pie, and it brings better and more affordable life-status improving products to consumers.


Now, are these jobs that are made available in the US? Because what I seem to see is that as big business has increasing profits, they slash the American workforce to make even more money.
I assume you have data to support this claim?


Wow, gbaji, that's pretty weak even for you.

As an answer, please tell me if the Levi's jeans you bought in the last few years are "Made in the USA"?

Because they aren't.

The company is here in the US; the manufacturing is now done overseas.

There's plenty of other examples; this is just one.
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#112 Aug 10 2011 at 11:33 AM Rating: Good
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gbaji wrote:
xantav wrote:
Gbaji wrote:
I think it's quite easy to show evidence that wealth held in the hands of big business and their investors does do exactly what conservatives say it will. It creates jobs, it grows the whole economic pie, and it brings better and more affordable life-status improving products to consumers.


Now, are these jobs that are made available in the US? Because what I seem to see is that as big business has increasing profits, they slash the american workforce to make even more money.


I assume you have data to support this claim?
Do you have data to support your claim?




Edited, Aug 10th 2011 7:34pm by Elinda
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#113 Aug 10 2011 at 2:27 PM Rating: Good
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Elinda wrote:
gbaji wrote:
xantav wrote:
Gbaji wrote:
I think it's quite easy to show evidence that wealth held in the hands of big business and their investors does do exactly what conservatives say it will. It creates jobs, it grows the whole economic pie, and it brings better and more affordable life-status improving products to consumers.


Now, are these jobs that are made available in the US? Because what I seem to see is that as big business has increasing profits, they slash the american workforce to make even more money.


I assume you have data to support this claim?
Do you have data to support your claim?




Edited, Aug 10th 2011 7:34pm by Elinda

Why would you do that? Smiley: glare
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#114 Aug 10 2011 at 4:34 PM Rating: Decent
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Friar Bijou wrote:
gbaji wrote:
xantav wrote:
Gbaji wrote:
I think it's quite easy to show evidence that wealth held in the hands of big business and their investors does do exactly what conservatives say it will. It creates jobs, it grows the whole economic pie, and it brings better and more affordable life-status improving products to consumers.


Now, are these jobs that are made available in the US? Because what I seem to see is that as big business has increasing profits, they slash the American workforce to make even more money.
I assume you have data to support this claim?


Wow, gbaji, that's pretty weak even for you.


Why? Someone says that they see a pattern which I don't see and I ask them for evidence to support it? That seems like a pretty reasonable question, don't you agree?

Quote:
As an answer, please tell me if the Levi's jeans you bought in the last few years are "Made in the USA"?


That doesn't address the claim that was made though. He said that when big businesses profits increase, they eliminate their workforce in the US in order to make even more money. The fact that most things we buy aren't made in America doesn't tell us anything about why they are no longer made in America.


I'm not arguing that companies don't seek profits. I'm questioning the directionality of the issue. Businesses do not offshore their operations because they earn big profits. They offshore their operations because they are not earning big profits. They move their operations offshore when the domestic operations become less profitable. But the claim being made suggests the somewhat absurd idea that if the Levi Strauss was making huge amounts of money making jeans in the US, that this would cause them to decide to make them somewhere else.


That's kinda ridiculous, right? They choose to move their operations elsewhere *after* the profits from operating domestically become less profitable. The directionality of the cause/effect relationship is backwards from what was claimed. If we could make operating in the US more profitable for that company, they would presumably hire more people here than they do. We can certainly say that it wouldn't make them hire less. And I would assume that you can grasp the obvious fact that by making it less profitable for them certainly isn't going to make them hire more people.



Isn't that really the issue here? Can anyone really honestly argue that making it more expensive to hire people in the US will somehow result in more jobs being created? If you want to create jobs, the last thing you should do is threaten to raise taxes on big businesses and mandate additional costs for each person hired. Yet, that's exactly what the Democrats did. And now they stand around wondering why those big businesses aren't hiring anyone. The Dems have basically spent the last 3 years telling businesses that if they hire people, they're going to hit them over the head with a 2x4. Is it really that hard for you people to see why unemployment is still high?


Please tell me you can see this?
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#115 Aug 11 2011 at 7:49 AM Rating: Decent
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That seems like a pretty reasonable question, don't you agree?

Only when it's coming from a reasonable person, I'm afraid. From you, it's an invitation to dance in the ballroom of lunacy.
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Hyrist wrote:
Ok, now we're going to get slash fiction of Wint x Kachi somehere... rule 34 and all...

Never confuse your inference as the listener for an implication of the speaker.

Good games are subjective like good food is subjective. You're not going to seriously tell me that there's not a psychological basis for why pizza is great and lutefisk is revolting. The thing about subjectivity is that, as subjects go, humans actually have a great deal in common.
#116 Aug 11 2011 at 4:53 PM Rating: Good
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gbaji wrote:
Businesses do not offshore their operations because they earn big profits. They offshore their operations because they are not earning big profits.


Yeah, every company in the USA was going belly up before they decided to exploit underpaid labour overseas...riiiight.... lol


You're hilarious. Show me the data which supports your claim. These companies were plenty profitable before they went offshore - they went offshore to make more money, not because they were losing money by manufacturing in north america.

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When it comes to sitting around not doing anything for long periods of time, only being active for short windows, and marginal changes and sidegrades I'd say FFXI players were the perfect choice for politicians.

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#117 Aug 11 2011 at 5:26 PM Rating: Decent
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Iron Chef Olorinus wrote:
gbaji wrote:
Businesses do not offshore their operations because they earn big profits. They offshore their operations because they are not earning big profits.


Yeah, every company in the USA was going belly up before they decided to exploit underpaid labour overseas...riiiight.... lol


In your world there is apparently no gap between "earning big profits" and "going belly up". Can you spot the fallacy in your statement? Businesses calculate profits based on business models. At some point in between those two extremes, a business will decide it makes more sense to build something in Taiwan than to build it in the US.


Quote:
You're hilarious. Show me the data which supports your claim. These companies were plenty profitable before they went offshore - they went offshore to make more money, not because they were losing money by manufacturing in north america.


Again though, you are going off the question at hand. The issue is whether, everything else being equal, increasing tax rates and/or health insurance costs for employees will increase or decrease the rate at which businesses create jobs? I said that doing those things will decrease the rate of job creation and therefore increase unemployment. More broadly, I stated that anything which makes domestic employment less profitable will decrease domestic employment, and anything which makes it more profitable will increase it.


In response I got a claim that if we make business in the US more profitable, the big businesses will just pocket that extra money and spend it hiring cheap labor overseas. That's the claim I'm refuting, because it makes no damn sense. If that were true, there would be no employment in the US at all. Cost of labor is not the only factor. It's just one of many. Again, if it were the only factor, then no one would hire anyone in the US to do anything that could be done elsewhere. Clearly, that isn't the case, so clearly there are other factors involved which outweigh labor costs. However, any increase in relative cost of labor (or decrease in profits resulting from domestic labor) will affect that rate of employment.


It's not an all-or-nothing proposition. It's about relative numbers. Making hiring people in the US less profitable will obviously reduce the rate at which business will hire people in the US. Conversely, making hiring people in the US more profitable will increase that rate. I'm not sure why this is even subject to debate.

Edited, Aug 11th 2011 4:28pm by gbaji
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#118 Aug 12 2011 at 3:18 PM Rating: Good
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Gbaji, are you for or against the GOP created multinational tax arbitrage laws that " prevent double taxation" and incentivize companies to outsource manufacturing by allowing MNCs to realize US sales
profits in production areas thus paying tax (often at lower rates) to non-US governments?
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#119 Aug 12 2011 at 3:49 PM Rating: Decent
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Timelordwho wrote:
Gbaji, are you for or against the GOP created multinational tax arbitrage laws that " prevent double taxation" and incentivize companies to outsource manufacturing by allowing MNCs to realize US sales profits in production areas thus paying tax (often at lower rates) to non-US governments?


That's a far more complex question than can be answered in a simple yes or no format.

First off, I don't agree with your premise. But to address this, we have to also understand that there are two types of offshoring. Most offshoring has nothing at all to do with moving jobs from the US to other shores and a hell of a lot to do with expanding US corporations into foreign markets and utilizing foreign labor to do so. If the only way it's cost effective for my business to sell widgets in China is to operate a widget factory in China, then this in no way impacts my domestic widget making business or market. Even if widget production in the US goes down during this time period, you can't conclude that this represents a move of jobs from the US to China (or wherever). It's quite possible that widget production in the US decreased because widget consumption in the US decreased (maybe the US has moved on to some newer/better product), and one has nothing to do with the other than that they happened to occur at around the same time (correlation != causation, right?). Unless you can show that we used to make widgets in the US and sell them in China, and now we're moving that widget making operation to China, you can't say that the jobs were stolen/lost/whatever. Those jobs would not have existed anyway. You can't lose what you never had.


Once you understand that, what you'll see is that the "double taxation" rules the US attempts to put in place, while often sold as a mean of protecting jobs, actually ends out hurting us in many cases. What it does is force companies to completely spin off their divisions which operate in foreign countries, effectively making them foreign corporations (not effectively, actually!). This results in a net reduction of tax revenue and economic benefits back in the US for exactly the reason that this now-foreign company cannot ever send a single dime of its profits back to the US. We don't just lose out on the tax revenue, but also on any future use of the profits from that venture.


Imagine a corporation which designs products in the US, but manufactures them overseas. Absent double-tax rules, the profits from the manufacture (and sale) of their products worldwide will come back to corporate headquarters in the US. Sure, they wont pay corporate income taxes on them, but they may use some of that money to expand their design operations in the US (hiring everyone from highly skilled engineers down to the janitors cleaning the bathrooms), or R&D, or spin off into whole different areas (like buying sports teams, stadiums, sponsoring arts and theater, donating to charities, etc). By applying the double-tax systems, you may get some increased tax revenue in the short term, but the desired goal (encouraging corporations to keep their entire operation inside the US) is just plain unrealistic. It's not going to happen. Either those corporations will end out crippling their own operations and ultimately failing to compete in a global market, or they'll spin off into exactly the sort of foreign corp model I mentioned above. And what happens then is that zero dollars come back to the US in any form. No profits. No taxes, No investments. Nothing.


And the real risk? The corps might someday decide that it's not worth even keeping their design work in the US either. Why go through the hoops? Just make the whole corp foreign, home base yourself somewhere else, and move everyone out of the US. IMO, those sorts of taxes are isolationist in nature, and are incredibly short sighted. In a rapidly moving and growing global economy, putting up arbitrary blocks which hamper your own corporations from competing is just plain dumb. We get far far more economic benefits from corporate activity than just the tax revenue they generate.


Let me be clear that this is a general position. Obviously, there may be specific cases where a given tax might be justified. But in general, it's a bad idea.
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#120 Aug 12 2011 at 8:11 PM Rating: Good
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No, I'm not talking about the participatory taxation splitting that goes on when a MNC develops whole hog supply chains in multiple markets. I was specifically asking about the incentives that allow a US based, but operating multinationally, business to realize it's profits in other markets, even when the business done which created those profits was done in the US. This allows a MNC to shift money around so that they don't pay taxes, or pay the reduced secondary taxation rates on US profits, which technically increases their competitive advantage, but also gives a multinationally based company a disproportionately large competitive advantage against solely US based companies. What I mean by incentivizing outsourcing, is that it gives an additional incentive above and beyond the labor pricing arbitrage that traditional outsourcing operations provide.

The way in which this is actually carried out is more convoluted (Yeah, more convoluted) than the way I laid it out here, but their are some weird transfer pricing and for stated taxes, non-nexus exemptions (Which doesn't apply as much in relation to MNCs), along with various other mechanics that generate the sum total of the incentives laid out above.

Edited, Aug 12th 2011 10:12pm by Timelordwho
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#121 Aug 12 2011 at 8:52 PM Rating: Decent
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Timelordwho wrote:
No, I'm not talking about the participatory taxation splitting that goes on when a MNC develops whole hog supply chains in multiple markets.


Your reference to "double taxation" seemed to indicate you were talking about tax rules in which a corp headquartered in the US has to pay taxes on profits even if they were generated wholly in a foreign country in addition to whatever taxes they are required to pay within that country. That's usually what is meant by that phrase in the context of multinational corporations and taxation. The US is (AFAIK) the only country which does this and many conservatives feel that it puts US based corps at a significant disadvantage against those headquartered elsewhere and creates an incentive to simply move the whole corp to a foreign country rather than deal with the cumbersome steps required to avoid the double taxes.

If you were speaking about something else, it was completely unclear (and it's still not really clear). I'm just not aware of what else you could have been referring to.


Quote:
I was specifically asking about the incentives that allow a US based, but operating multinationally, business to realize it's profits in other markets, even when the business done which created those profits was done in the US.


Are you talking about how the law is right now, how conservatives would like to change it, or how liberals would like to change it? As I understand it, there's no concept of "realizing profits" in another country that takes place. Corps are generally taxed directly in terms of importing and exporting goods. If we're looking purely at corporate income taxes, as I attempted to explain in the last thread we had about this, corporations can pretty much always shift around where/when/how they "realize profits" for purposes of income. It's almost a meaningless point to make.

The distinction is that the US attempts to collect income tax revenue on 100% of all profits a US headquartered corp makes, no matter where it made it, or how. I suppose you could argue that it's unfair for a corp to "shift profits" to other markets or something, but the reality is that this is a basic function of corporate economics. It can't be avoided. Most countries don't attempt to force the issue because it ends out in exactly the kind of "all or nothing" mess the US has going.


Quote:
This allows a MNC to shift money around so that they don't pay taxes, or pay the reduced secondary taxation rates on US profits, which technically increases their competitive advantage, but also gives a multinationally based company a disproportionately large competitive advantage against solely US based companies.


You could flip that around and argue that the current US tax code hurts solely US based and operating corporations and attempts to harm those which operate multinationally in the same way. This is why some of us think our corporate tax code in the US is poorly managed and short sighted. There are methods to tax economic activity (buying, selling, importing of goods) which avoid the pitfalls of attempting to tax corporations on "income". If you stop and think about it the very concept of "income" for a corporation is pretty nebulous at best.

Quote:
What I mean by incentivizing outsourcing, is that it gives an additional incentive above and beyond the labor pricing arbitrage that traditional outsourcing operations provide.


Yes. US tax code currently drives corporations away from operating in the US. The solution should not be to try to "close the loopholes" that corps currently use to get around this, but to change our tax code so that we're not trying to do something which is inherently moronic in the first place.

As I alluded to before, there's "how it is now", which basically consists of poorly written corporate income tax code which most semi-intelligent corporations can usually figure out how to avoid, there's "how the conservatives would like it", which involves removing the silly code and replacing it with more intelligent activity based taxation methods like everyone else in the damn world uses, and there's "how the liberals want it" which is to make it illegal to use the methods corps use today to avoid having to pay the silly income taxes on their total profits, even if significant portions of it is earned elsewhere.


Hopefully, that addresses at least some part of your question? As you're aware, this is a more complicated issue than just "do you favor making it easier for corps to outsource?". I think that by and large, corps are going to operate their businesses where it makes the most sense to operate them. That includes where they hire workers as well. I tend to think that the "catch flies with honey" approach is better than trying to force corps to do things they don't want to do. Once you're in the multinational business arena, you can only push that so far before folks just pack up their toys and move somewhere else. One country, even the US, simply can't make a multinational corp operate in the US if they don't want to. The best way to do that is to make it worthwhile to do so. Penalizing them for doing it, and then trying to force them to accept the penalty when they work to avoid it, just seems like exactly the wrong thing to do.


But then, I'm a conservative. I tend to go with the "build it and they will come" approach rather than the "force them to come and they'll build it for you because they have no choice." method the left seems to favor.

Edited, Aug 12th 2011 7:56pm by gbaji
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#122 Aug 12 2011 at 10:21 PM Rating: Decent
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Just a out of curiosity when did ThiefX become Varus? This thread makes no sense now.
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#123 Aug 13 2011 at 12:03 AM Rating: Excellent
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Hopefully, that addresses at least some part of your question? As you're aware, this is a more complicated issue than just "do you favor making it easier for corps to outsource?". I think that by and large, corps are going to operate their businesses where it makes the most sense to operate them. That includes where they hire workers as well. I tend to think that the "catch flies with honey" approach is better than trying to force corps to do things they don't want to do. Once you're in the multinational business arena, you can only push that so far before folks just pack up their toys and move somewhere else. One country, even the US, simply can't make a multinational corp operate in the US if they don't want to. The best way to do that is to make it worthwhile to do so. Penalizing them for doing it, and then trying to force them to accept the penalty when they work to avoid it, just seems like exactly the wrong thing to do.


I have no problem with corps investing funds in whatever place makes business sense to invest. What I am pointing out here is something which was build into a system, in this case the tax code, that makes a business more profitable selling to the US when it is located outside the US as an artificial product of US policy, as opposed to say, the cheap price of labor drawing manufacturing jobs.

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As I alluded to before, there's "how it is now", which basically consists of poorly written corporate income tax code which most semi-intelligent corporations can usually figure out how to avoid, there's "how the conservatives would like it", which involves removing the silly code and replacing it with more intelligent activity based taxation methods like everyone else in the damn world uses, and there's "how the liberals want it" which is to make it illegal to use the methods corps use today to avoid having to pay the silly income taxes on their total profits, even if significant portions of it is earned elsewhere.


This is the tax code as it exists today. Previously this was not the tax code. My question is, do you prefer this aspect of the current incarnation? I color this question with the fact that it was a change lobbied for to, and then pushed through by the GOP.

It's not a "The tax code is poorly written, so corps can work around it" It's "The tax code is poorly written, because the corps rewrote it, and thus built these backdoors into it." I understand that it's a complex problem for multiple reasons, not the least of which is that most who would take the time to understand what it means is probably taking advantage of it, so therefore has no reason to change it.

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You could flip that around and argue that the current US tax code hurts solely US based and operating corporations and attempts to harm those which operate multinationally in the same way. This is why some of us think our corporate tax code in the US is poorly managed and short sighted.


By harming MNCs do you mean making them pay taxes on their allotted share of wealth? If you do not tax them, but tax others, it means other corps and residents take the hit instead. This isn't a question of size of governance, but a question of burden of governance. So you don't take this the wrong way, size is irrelevant to a proportionate percentile.

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Your reference to "double taxation" seemed to indicate you were talking about tax rules in which a corp headquartered in the US has to pay taxes on profits even if they were generated wholly in a foreign country in addition to whatever taxes they are required to pay within that country. That's usually what is meant by that phrase in the context of multinational corporations and taxation. The US is (AFAIK) the only country which does this and many conservatives feel that it puts US based corps at a significant disadvantage against those headquartered elsewhere and creates an incentive to simply move the whole corp to a foreign country rather than deal with the cumbersome steps required to avoid the double taxes.


No, I'm not addressing taxes on profits generated in other countries. I'm actually on the side of corps on that one, except in situations where they aren't actually generated in other countries, but rather complex paper valuations where those profits actually came from the US but have been shifted elsewhere.

I'm discussing the scenario where a company generates profits in the US and shifts those profits to other locations via holding companies typically places with the lowest tax rate for the held asset class. They then pay cycles costs to those companies and then only actually pay taxes on the profits by those secondary corps to other governments, and at lower tax rates.

For example, Company A builds cell phones in the US. They pay taxes on this. Company B builds cell phones in SEA country D, but sells cell phones in the US, via company C which is they also own. Company C turns very little profit, because all of that is shifted to company B. Company B pays SEA country D taxes on the lions share of the profits, and only that other small portion is taxed by the US.
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#124 Aug 15 2011 at 11:40 AM Rating: Excellent
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Warren Buffet just today

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Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.


So according to someone who ACTUALLY HAS MONEY TO INVEST in large amounts... the gbaji theorem of "taxes stop job creation and investment" is wrong. What a shock.

Although I am sure I should believe gbaji and thiefx who obviously know more about what the super rich do with their money than Warren Buffet, right?
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#125 Aug 15 2011 at 2:10 PM Rating: Good
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Pfft, like we should take economic advise from the guy who sang "Cheeseburger in Paradise".
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#126 Aug 15 2011 at 4:03 PM Rating: Default
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Timelordwho wrote:
I have no problem with corps investing funds in whatever place makes business sense to invest. What I am pointing out here is something which was build into a system, in this case the tax code, that makes a business more profitable selling to the US when it is located outside the US as an artificial product of US policy, as opposed to say, the cheap price of labor drawing manufacturing jobs.


Ok. So we both agree that the way the US tax code is currently written has a harmful effect on US domestic productivity.

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This is the tax code as it exists today. Previously this was not the tax code.


Previously, being when? You make it sound like you want to blame someone for it, but are unspecific about who did this and when. The reality is that it was a series of changes made over time, mostly intended to encourage foreign corporations to invest in the US (so to get Toyota to build their cars here, for example), but with the negative side effect we're talking about today.

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My question is, do you prefer this aspect of the current incarnation? I color this question with the fact that it was a change lobbied for to, and then pushed through by the GOP.


No. I don't prefer it (although as I've pointed out, it's a bit more complex than a simple "yes/no" answer can give). And you are blaming one group, incorrectly IMO. You'd need to provide more than just your own statement that it's a "fact" to convince me of this. Surely, you aren't suggesting that US corporations actually lobbied for a tax system which penalized them? That seems kinda silly, doesn't it?

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It's not a "The tax code is poorly written, so corps can work around it" It's "The tax code is poorly written, because the corps rewrote it, and thus built these backdoors into it."


Ah... You are making exactly that silly claim. So they lobbied for tax code so they'd have to lobby to make loopholes around that tax code? That seems kinda counterproductive, doesn't it? Wouldn't they have just lobbied to not have the penalizing tax code put in place from day one? Doesn't it seem more likely that political forces opposed to big business (like say Democrats), put the tax code in place, and businesses lobbied to get loopholes put in as a defense against that code? Makes more sense that way, doesn't it?

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I understand that it's a complex problem for multiple reasons, not the least of which is that most who would take the time to understand what it means is probably taking advantage of it, so therefore has no reason to change it.


I really think you're underestimating the fact that competing political ideologies will result in legal code which does one thing but has loopholes allowing those things to be avoided. Occam's Razor and all of that. If the corps truly had the kind of influence you suggest, they'd have just had the code written to not tax them for economic activity in the US at all. Certainly, they'd have just eliminated corporate taxes entirely so as to not have to bother with the effort and expense of creating dummy corps to shuffle money around so as to avoid the taxes. Right?

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You could flip that around and argue that the current US tax code hurts solely US based and operating corporations and attempts to harm those which operate multinationally in the same way. This is why some of us think our corporate tax code in the US is poorly managed and short sighted.


By harming MNCs do you mean making them pay taxes on their allotted share of wealth?


No. By harming them, I mean making them pay more taxes than their activities in the US should warrant.

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If you do not tax them, but tax others, it means other corps and residents take the hit instead. This isn't a question of size of governance, but a question of burden of governance. So you don't take this the wrong way, size is irrelevant to a proportionate percentile.


I think you're missing my point. If instead of attempting to tax 100% of all corporate income earned by any US based corporation, which then forces those corporations to "hide" their income offshore in order to avoid the taxes, we instead only taxed them based on their economic activity in the US, we'd actually collect more taxes than we do right now. The US tax code creates an "all or nothing" effect for US corporations. They have to hide their income or else pay taxes even for income earned elsewhere. For corporations which operate in multiple countries, this is sufficiently expensive that they'll expend the effort to work around it.

The result is that the US often collects zero taxes from corporations. Which is less than they could have collected if we had a more reasonable corporate tax system. Are you getting this yet? You have to accept the fact that quite often, if you raise taxes too high, or make them too unreasonable, you'll actually collect less taxes than if you made them more moderate and/or reasonable. People don't spend much effort avoiding taxes that are reasonable. When they're unreasonable, they'll spend the effort, and once they spend the effort to avoid taxes, they're going to avoid paying all of them, not just the unreasonable portion.

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No, I'm not addressing taxes on profits generated in other countries. I'm actually on the side of corps on that one, except in situations where they aren't actually generated in other countries, but rather complex paper valuations where those profits actually came from the US but have been shifted elsewhere.


Yes, but do you understand that because the only way for corporations to avoid paying unreasonable taxes on profits generated in other countries is to expend the effort in those complex paper shuffling operations, that once that cost/effort has been expended they can also use those same methods to avoid paying their "fair share" of taxes on profits generated in the US. One causes the other to happen.

Think of it this way: Let's imagine you have a local transit system. People can buy a bus/train/trolley ticket for whatever distance they're traveling and it's reasonably priced. Let's imagine that for many people this is less expensive and more convenient than owning a car. Now, imagine if the city arbitrarily decides to radically increase the cost to buy a ticket for any trip farther than 5 miles. So you can still buy a relatively inexpensive ticket to get to work, or the nearby shops, but it'll cost a ton to travel across town to visit your relatives, or whatever. Now, you might consider buying a car, so as to make those longer trips more cost effective, right? But once you buy a car, you might start using it to make those shorter trips too. Once you've spent the money to buy a car, you're going to tend to use it instead of taking the bus or train. As a result, total revenue from bus/train tickets will go down.

Same deal here. Once a corporation makes the decision to set up the mechanism to move profits made internationally into areas which can't be taxed by the US, why not use the same system to hide profits made domestically as well? They would not have done this in the first place if it weren't for the unreasonable and unfair taxes the US is trying to collect. But once they've taken those steps, it would be kinda foolish not to use them to avoid paying their fair share of taxes in the US as well.

That's the problem with the "all or nothing" system the US has set up for US based corps. You can't blame the players for playing according to the rules you created. We set up the rules which basically force the corps to do this. Why blame them?

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I'm discussing the scenario where a company generates profits in the US and shifts those profits to other locations via holding companies typically places with the lowest tax rate for the held asset class. They then pay cycles costs to those companies and then only actually pay taxes on the profits by those secondary corps to other governments, and at lower tax rates.


Yeah. I know. That's what I'm talking about as well. I'm just going a step farther and addressing why the corporations do that in the first place. Taxing them more isn't the solution here.

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For example, Company A builds cell phones in the US. They pay taxes on this. Company B builds cell phones in SEA country D, but sells cell phones in the US, via company C which is they also own. Company C turns very little profit, because all of that is shifted to company B. Company B pays SEA country D taxes on the lions share of the profits, and only that other small portion is taxed by the US.


Again, ask yourself why they go through those hoops. It's because of the way the US taxes US based corps. Change that system, and they'll have no reason to do this, and we'll collect our "fair share" of taxes.
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#127 Aug 15 2011 at 4:59 PM Rating: Good
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gbaji wrote:


Same deal here. Once a corporation makes the decision to set up the mechanism to move profits made internationally into areas which can't be taxed by the US, why not use the same system to hide profits made domestically as well? They would not have done this in the first place if it weren't for the unreasonable and unfair taxes the US is trying to collect. But once they've taken those steps, it would be kinda foolish not to use them to avoid paying their fair share of taxes in the US as well. instead of making up justifications after the fact for their criminal behavior, the American people took white collar crime and tax evasion seriously and tossed CEOs of corporations engaging in tax evasion into jail, where they belong.


Fixed that for you.
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#128 Aug 15 2011 at 6:23 PM Rating: Good
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Iron Chef Olorinus wrote:
gbaji wrote:


Same deal here. Once a corporation makes the decision to set up the mechanism to move profits made internationally into areas which can't be taxed by the US, why not use the same system to hide profits made domestically as well? They would not have done this in the first place if it weren't for the unreasonable and unfair taxes the US is trying to collect. But once they've taken those steps, it would be kinda foolish not to use them to avoid paying their fair share of taxes in the US as well. instead of making up justifications after the fact for their criminal behavior, the American people took white collar crime and tax evasion seriously and tossed CEOs of corporations engaging in tax evasion into jail, where they belong.


Fixed that for you.


But if we agree that it's unfair to attempt to collect corporate income tax for *all* profits, and we really only care about getting corps to pay their fair share for profits generated in the US, doesn't it make more sense to simply change the tax code to accomplish this and only this rather than leaving it in place and going more strongly after corps that avoid the unfair portions as well?

What you're saying just makes no sense at all. Also, such closing of loopholes would include all the taxes, not just the "fair share" that corps should pay for domestic activity. Once again, we're put in the same "all or nothing" situation. Why not fix the code so that this isn't the case and then the problem goes away?
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#129 Aug 16 2011 at 11:14 AM Rating: Decent
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Pfft, like we should take economic advise from the guy who sang "Cheeseburger in Paradise".


Maybe he likes the restaurant? I ate at one recently and that's a totally defensible position.
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