Comments on: Understanding the President’s international tax proposal http://keithhennessey.com/2009/05/06/potus-worldwide-tax/ Your guide to American economic policy Mon, 15 Mar 2010 21:49:22 -0400 http://wordpress.org/?v=abc hourly 1 By: Tax Lawyer http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-13462 Tax Lawyer Mon, 23 Nov 2009 03:49:53 +0000 http://keithhennessey.com/?p=2164#comment-13462 I've been involved in taxations for longer then I care to admit, both on the individualized side (all my employed life-time!!) and from a legal viewpoint since passing the bar and following tax law. I've put up a lot of advice and rectified a lot of wrongs, and I must say that what you've put up makes complete sense. Please continue the good work - the more people know the better they'll be outfitted to handle with the tax man, and that's what it's all about.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('13462','Tax Lawyer'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('13462','Tax Lawyer','I\'ve been involved in taxations for longer then I care to admit, both on the individualized side (all my employed life-time!!) and from a legal viewpoint since passing the bar and following tax law. I\'ve put up a lot of advice and rectified a lot of wrongs, and I must say that what you\'ve put up makes complete sense. Please continue the good work - the more people know the better they\'ll be outfitted to handle with the tax man, and that\'s what it\'s all about.'); return false;">Quote</a></div> I’ve been involved in taxations for longer then I care to admit, both on the individualized side (all my employed life-time!!) and from a legal viewpoint since passing the bar and following tax law. I’ve put up a lot of advice and rectified a lot of wrongs, and I must say that what you’ve put up makes complete sense. Please continue the good work – the more people know the better they’ll be outfitted to handle with the tax man, and that’s what it’s all about.
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]]> By: Joe http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-12084 Joe Wed, 16 Sep 2009 17:53:21 +0000 http://keithhennessey.com/?p=2164#comment-12084 >>If loopholes are closed and US domiciled companies really have to start paying one of the highest corporate income taxes in the WORLD on their worldwide income, why would any US based company not change their primary incorporation out of the US??<< If the US tax laws were reformed, a corporation would not escaping US taxation by merely incorporating overseas. Why? You cannot conduct business in the USA without at least being registered as a foreign corporation. If taxation is based on business activities conducted within the USA without regard to where the corporation is incorporated (much like the California system of global taxation) it matters very little where corporation has incorporated an set up a front office. The threat of businesses leaving US soil is way overblown IMHO. Moving business function away from the customers damages the business. <div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('12084','Joe'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('12084','Joe','>>If loopholes are closed and US domiciled companies really have to start paying one of the highest corporate income taxes in the WORLD on their worldwide income, why would any US based company not change their primary incorporation out of the US??<< \n \nIf the US tax laws were reformed, a corporation would not escaping US taxation by merely incorporating overseas. Why? You cannot conduct business in the USA without at least being registered as a foreign corporation. If taxation is based on business activities conducted within the USA without regard to where the corporation is incorporated (much like the California system of global taxation) it matters very little where corporation has incorporated an set up a front office. The threat of businesses leaving US soil is way overblown IMHO. Moving business function away from the customers damages the business. '); return false;">Quote</a></div> >>If loopholes are closed and US domiciled companies really have to start paying one of the highest corporate income taxes in the WORLD on their worldwide income, why would any US based company not change their primary incorporation out of the US??<<

If the US tax laws were reformed, a corporation would not escaping US taxation by merely incorporating overseas. Why? You cannot conduct business in the USA without at least being registered as a foreign corporation. If taxation is based on business activities conducted within the USA without regard to where the corporation is incorporated (much like the California system of global taxation) it matters very little where corporation has incorporated an set up a front office. The threat of businesses leaving US soil is way overblown IMHO. Moving business function away from the customers damages the business.

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]]> By: Economic Notes « 36 Chambers – The Legendary Journeys: Execution to the max! http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-407 Economic Notes « 36 Chambers – The Legendary Journeys: Execution to the max! Tue, 19 May 2009 18:40:50 +0000 http://keithhennessey.com/?p=2164#comment-407 [...] Democrats love to raise taxes.  Obama’s no different. Comments [...]<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('407','Economic Notes « 36 Chambers – The Legendary Journeys: Execution to the max!'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('407','Economic Notes « 36 Chambers – The Legendary Journeys: Execution to the max!','[...] Democrats love to raise taxes.  Obama’s no different. Comments [...]'); return false;">Quote</a></div> [...] Democrats love to raise taxes.  Obama’s no different. Comments [...]
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]]> By: WJ http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-405 WJ Mon, 11 May 2009 20:15:52 +0000 http://keithhennessey.com/?p=2164#comment-405 If loopholes are closed and US domiciled companies really have to start paying one of the highest corporate income taxes in the WORLD on their worldwide income, why would any US based company not change their primary incorporation out of the US?? All companies who earn income in the US are on the same footing, regardless of where their primary incorporation is located, in having to pay a very high corporate tax rate. But if your British, or French, or Korean competitor is paying 15% for their China based income and Mr US company has to pay 35%, then Mr US company won't stay located in the US for very long. This reminds me of Pres Obama stating that he would want to raise capital gains taxes even if it meant lower taxes paid, all in the name of "fairness".<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('405','WJ'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('405','WJ','If loopholes are closed and US domiciled companies really have to start paying one of the highest corporate income taxes in the WORLD on their worldwide income, why would any US based company not change their primary incorporation out of the US??\n\nAll companies who earn income in the US are on the same footing, regardless of where their primary incorporation is located, in having to pay a very high corporate tax rate. But if your British, or French, or Korean competitor is paying 15% for their China based income and Mr US company has to pay 35%, then Mr US company won\'t stay located in the US for very long.\n\nThis reminds me of Pres Obama stating that he would want to raise capital gains taxes even if it meant lower taxes paid, all in the name of \"fairness\".'); return false;">Quote</a></div> If loopholes are closed and US domiciled companies really have to start paying one of the highest corporate income taxes in the WORLD on their worldwide income, why would any US based company not change their primary incorporation out of the US??

All companies who earn income in the US are on the same footing, regardless of where their primary incorporation is located, in having to pay a very high corporate tax rate. But if your British, or French, or Korean competitor is paying 15% for their China based income and Mr US company has to pay 35%, then Mr US company won’t stay located in the US for very long.

This reminds me of Pres Obama stating that he would want to raise capital gains taxes even if it meant lower taxes paid, all in the name of “fairness”.

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]]> By: nFiniteEcho.com » Blog Archive » Economic insights from Keith Hennessey and Greg Mankiw http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-406 nFiniteEcho.com » Blog Archive » Economic insights from Keith Hennessey and Greg Mankiw Mon, 11 May 2009 04:24:17 +0000 http://keithhennessey.com/?p=2164#comment-406 [...] The territorial system creates a level playing field for American firms when they are competing overseas. Your factory B in China is at a severe disadvantage compared to the British factory C in China. You might consider moving your headquarters to London and turning your firm into a British corporation. As the global economy grows more interconnected this is increasingly easy to do. read more… [...]<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('406','nFiniteEcho.com » Blog Archive » Economic insights from Keith Hennessey and Greg Mankiw'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('406','nFiniteEcho.com » Blog Archive » Economic insights from Keith Hennessey and Greg Mankiw','[...] The territorial system creates a level playing field for American firms when they are competing overseas. Your factory B in China is at a severe disadvantage compared to the British factory C in China. You might consider moving your headquarters to London and turning your firm into a British corporation. As the global economy grows more interconnected this is increasingly easy to do. read more… [...]'); return false;">Quote</a></div> [...] The territorial system creates a level playing field for American firms when they are competing overseas. Your factory B in China is at a severe disadvantage compared to the British factory C in China. You might consider moving your headquarters to London and turning your firm into a British corporation. As the global economy grows more interconnected this is increasingly easy to do. read more… [...]
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]]> By: Chris http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-404 Chris Fri, 08 May 2009 02:28:55 +0000 http://keithhennessey.com/?p=2164#comment-404 Thanks for your post. I really like your blog. My question is this. You say that in response to this law change, entire US firms will relocate overseas, thereby escaping US taxation entirely. E.g., let's say Chevron. But Chevron probably has a lot of assets with "built-in-gains", i.e., with fair market value above tax basis, or call them appreciated assets. I think if they try to locate overseas the US government will just levy a tax on those gains. Or maybe they wouldn't even need that excuse - they could just levy an arbitrary exit tax on the market cap value of the company. Can't you picture the administration and congress doing that? I really wish these corporations could relocate overseas, b/c I feel like we have a very bad business climate right now. People need some kind of wake up call to understand that we are being economically damaged by relatively high corporate taxes.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('404','Chris'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('404','Chris','Thanks for your post. I really like your blog. My question is this. You say that in response to this law change, entire US firms will relocate overseas, thereby escaping US taxation entirely. E.g., let\'s say Chevron. But Chevron probably has a lot of assets with \"built-in-gains\", i.e., with fair market value above tax basis, or call them appreciated assets. I think if they try to locate overseas the US government will just levy a tax on those gains. Or maybe they wouldn\'t even need that excuse - they could just levy an arbitrary exit tax on the market cap value of the company. Can\'t you picture the administration and congress doing that?\n\nI really wish these corporations could relocate overseas, b\/c I feel like we have a very bad business climate right now. People need some kind of wake up call to understand that we are being economically damaged by relatively high corporate taxes.'); return false;">Quote</a></div> Thanks for your post. I really like your blog. My question is this. You say that in response to this law change, entire US firms will relocate overseas, thereby escaping US taxation entirely. E.g., let’s say Chevron. But Chevron probably has a lot of assets with “built-in-gains”, i.e., with fair market value above tax basis, or call them appreciated assets. I think if they try to locate overseas the US government will just levy a tax on those gains. Or maybe they wouldn’t even need that excuse – they could just levy an arbitrary exit tax on the market cap value of the company. Can’t you picture the administration and congress doing that?

I really wish these corporations could relocate overseas, b/c I feel like we have a very bad business climate right now. People need some kind of wake up call to understand that we are being economically damaged by relatively high corporate taxes.

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]]> By: NormD http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-402 NormD Thu, 07 May 2009 20:07:31 +0000 http://keithhennessey.com/?p=2164#comment-402 I am not sure I fully understand - please compare Company Factory Sells-to Tax-Rate Notes US US US 35% US US China 15% Until money is brought home US China US 35% US China China 35%? US company at severe disadvantage China US US ? China US China ? Probably never happens China China US 15%? China China China 15% I was part of an IT team the restructured a company to lower taxes - there were lots of strange laws - I think a Chinese company cannot directly sell in the US, instead they create a legal entity in the US that sells for them and, I assume, pays taxes on the "income". The problem is defining income, which equals selling_price-cost. There were endless arguments with tax authorities about what the cost was.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('402','NormD'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('402','NormD','I am not sure I fully understand - please compare\n\nCompany Factory Sells-to Tax-Rate Notes\n\nUS US US 35%\nUS US China 15% Until money is brought home\nUS China US 35%\nUS China China 35%? US company at severe disadvantage\nChina US US ?\nChina US China ? Probably never happens\nChina China US 15%?\nChina China China 15%\n\nI was part of an IT team the restructured a company to lower taxes - there were lots of strange laws - I think a Chinese company cannot directly sell in the US, instead they create a legal entity in the US that sells for them and, I assume, pays taxes on the \"income\". The problem is defining income, which equals selling_price-cost. There were endless arguments with tax authorities about what the cost was.'); return false;">Quote</a></div> I am not sure I fully understand – please compare

Company Factory Sells-to Tax-Rate Notes

US US US 35%
US US China 15% Until money is brought home
US China US 35%
US China China 35%? US company at severe disadvantage
China US US ?
China US China ? Probably never happens
China China US 15%?
China China China 15%

I was part of an IT team the restructured a company to lower taxes – there were lots of strange laws – I think a Chinese company cannot directly sell in the US, instead they create a legal entity in the US that sells for them and, I assume, pays taxes on the “income”. The problem is defining income, which equals selling_price-cost. There were endless arguments with tax authorities about what the cost was.

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]]> By: Morning Conservative Reading List - May 7, 2009 - AIP Blog - American Issues Project http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-403 Morning Conservative Reading List - May 7, 2009 - AIP Blog - American Issues Project Thu, 07 May 2009 13:52:43 +0000 http://keithhennessey.com/?p=2164#comment-403 [...] Keith Hennessey clarifies the President's international tax proposal. [...]<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('403','Morning Conservative Reading List - May 7, 2009 - AIP Blog - American Issues Project'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('403','Morning Conservative Reading List - May 7, 2009 - AIP Blog - American Issues Project','[...] Keith Hennessey clarifies the President's international tax proposal. [...]'); return false;">Quote</a></div> [...] Keith Hennessey clarifies the President's international tax proposal. [...]
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]]> By: Obama’s International Corporate Tax Proposal Explained « A Conservative Wanderer http://keithhennessey.com/2009/05/06/potus-worldwide-tax/comment-page-1/#comment-401 Obama’s International Corporate Tax Proposal Explained « A Conservative Wanderer Thu, 07 May 2009 00:04:28 +0000 http://keithhennessey.com/?p=2164#comment-401 [...] Taxation, Timothy Geithner — Conservative Wanderer @ 4:03 pm Economic guru Keith Hennessey clearly explains the new tax proposed by President Obama: Let’s look at three factories, each of which produces [...]
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