Tag Archives: Tax Rates

News

Why do corporations ship jobs overseas? What causes outsourcing of jobs?

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World Corporate Tax Rates
World Corporate Tax Rates

Here is a news story from Yahoo News that explains the problem and the cause of the problem. (H/T Dad)

Excerpt:

Large U.S. companies boosted their offshore earnings by 15 percent last year to a record $1.9 trillion, avoiding hefty tax bills by keeping the profits abroad, according to a new report.

The overseas earnings stockpile has climbed by 70 percent over the past five years, said research firm Audit Analytics. Data in its report covers the Russell 3000 index of the largest U.S. corporations.

U.S.-based multinationals do not have to pay U.S. corporate income tax on foreign earnings as long as the earnings do not enter the United States. Accounting rules also let the companies avoid recognizing a tax expense if management intends to keep the earnings indefinitely reinvested overseas.

“It would probably be nice to have this money in our country being used in our economy, but at the moment we see it growing elsewhere,” said Don Whalen, general counsel and director of research at Audit Analytics.

Conglomerate General Electric Co (GE.N), had the most indefinitely reinvested overseas earnings, at about $108 billion, while drugmaker Pfizer Inc (PFE.N) was next with $73 billion, according to Audit Analytics.

The simple answer is that Americans believe that corporations need to pay high taxes and operate under burdensome regulations. This eats into their profits, making it harder for them to grow and expand. The plain truth is that it is easier for corporations to expand and hire in countries with lower taxes and fewer regulations. Besides, who wants to be wiped out by a nuisance lawsuit just because someone spills coffee on themselves and then refuses to take responsibility? The smart play is to just opt out completely, and that’s what many corporations do – earning higher profits in more business-friendly countries.

News

What causes outsourcing, offshoring and tax avoidance? Greedy Democrat tax policies

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I have to link to this Fox News editorial, because they linked to my blog, and because it features a sensible libertarian Wayne Allyn Root, whom I blogged about before.

Excerpt:

The signs are everywhere that a tax rebellion has begun.

The latest U.S. Census showed us that the states with low taxes enjoyed the fastest population growth- states like Nevada, Texas, Florida, and Arizona.

Not surprisingly, the states losing the most population are all high tax states like California, New York, New Jersey, Connecticut, Maryland, and of course Obama’s Illinois.

These states that Americans are running from are all governed just like Obama wants to govern the entire country. Soon these same Americans running away from California, New York and Illinois will instead be running away from America.

Ask the co-founder of Facebook, who recently renounced his citizenship and left for Singapore (where the capital gains taxes are zero).

Ask big-time Democratic contributor Denise Rich, who recently renounced her citizenship to leave for Austria.

The trickle is turning into a torrent. Record numbers of wealthy Americans are giving up their citizenship- eight times more than before Obama became president.

Of course we already know that only one year after the UK imposed a “Millionaires Tax” two thirds of the millionaires in England disappeared off the tax rolls.

High taxes have worked well in England…they are about to endure an unheard of in history triple dip recession…the third recession in 5 years. Folks that’s called a Great Depression.

We already know that millionaires are escaping France at a record pace because of high tax rates imposed by the new Obama-clone Socialist President of France. Even leftist actors like Gerard Depardieu have been forced to abandon the country they love.

The famous actor isn’t alone. Requests by citizens to leave France are up by 500%.

But then came the coup de grace. Former French President Nicolas Sarkozy has just announced he is leaving France because of taxes.

High taxes are even chasing away the presidents of their own countries!

High taxes work great in France. Their Labor Minister announced just this week that France is “totally bankrupt.” His words.

I removed all the links from the excerpt except the link to me. But you can see all the links on the original Fox News version of the article.

I think that there is this attitude on the left that the hardest-working people are like sitting pigeons. That they can be financially raped over and over by rhetoricians who preen themselves in the public eye, while demonizing their victims. It doesn’t go on forever. Eventually people who produce scale back their efforts, or just move somewhere else. Why work for other people who hate you? Charity is one thing, but slavery is something else entirely. Companies also respond to incentives, and shift to greener pastures where the socialists are not in charge.

News

Middle class tax rate set to rise to nearly 50% in January 2013

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From the Heritage Foundation’s Foundry blog.

Excerpt:

A middle-class taxpayer’s income is subject to a 25 percent federal income tax. Then there is the federal Social Security and Medicare payroll tax of 13.3 percent in 2012—5.65 percent of that is removed from the employee’s paycheck, and the remaining 7.65 percent is paid by the employer. (In reality, the employee pays the entire 13.3 percent, because the employer’s portion of the tax does not affect the cost of labor: The employer would pay the employee 7.65 percent more if there were no employer’s portion of the payroll tax.)

So the 25 percent federal income tax plus 13.3 Social Security and Medicare payroll taxes equals 38.3 percent going to federal taxes in 2012.

And then there are state taxes. According to the Tax Foundation, the average state’s income tax rate for the middle-class taxpayer is 4.82 percent, which brings the total to 43.12 percent in federal and state taxes. And it’s going higher, thanks to the nearly $500 billion in tax increases for 2013 that some have called Taxmageddon. In January of next year, the federal income tax rate for middle-class taxpayers is scheduled to rise from 25 percent to 28 percent, and the payroll tax is scheduled to rise from 13.3 percent to 15.3 percent. This drives the marginal tax rate based on the aforementioned three taxes to 48.12 percent. Add in state and local property, corporate, excise, and other state and local taxes, and the percentage of each additional dollar that is taxed hovers around 50 percent.

When half of each additional dollar earned is taxed away, taxpayers experience a disincentive to start businesses or expand existing ones. This leads to fewer jobs being created.

It is outrageous that any dollar earned by a middle-class taxpayer would go as much to taxes as to supporting the taxpayer’s family. The government didn’t earn the taxpayer’s paycheck and shouldn’t be entitled to it.

People like me really do think about things like this – about getting up and going to work every day to earn half of what I am worth. Of giving up half my salary so that the Georgetown University student can have free contraception paid for by me. I am one of those people who pays about 45% of my income (federal, state and local) in taxes. If I had more of my own money, I could be following my own dreams – maybe to do a Ph.D and teach, or start a business, or become a minister. But those things can’t happen, because people keep voting for more and more benefits for themselves on my back – so that they don’t have to be burdened to make the decisions that it takes to take care of themselves and their families.

That’s what being a Democrat means – it means persisting in perpetual adolescence at the expense of people like me. It means taking away my dreams so that they can have my standard of living without having to work or play by the rules. Being a Democrat means piling up trillions of dollars of debt onto people who haven’t even been born – so that feminists can have free contraceptives. That’s what a Democrat is.