Now that the "boy wonder" of the House of Misrepresentation Budget Committee (chock full of oxymorons) has been enlisted into service aboard the HMS R-money into the "Admirals Club", I'm certain that one of his first in-briefings will be on the subject of "Buried Treasure". This will be a how-to session, and a required subject on a need to know basis for R-money's executive officer, well VP is more in line with corporate-speak.
Ry-Ann has recently come into some more doubloons, and R-money is known to ask his subordinates to contribute to his campaigns over the years, and we'll be thinking that this year will be no exception.
Aye, R-money has gained quite the reputation for his uncanny ability to secret away much booty in the various maritime destinations in the Caribbean as well as foreign land based strongholds. And he has much practical knowledge to import to his new charge, so together they will chart a new course for the enrichment of first themselves, and then primarily their backers, one of whom with Ry-Ann has an upcoming appointment. This Mr Adelson acquires much of his wealth from offshore gambling operations in a former colony in the East Indies, and will no doubt wish to impart with his monotheistic foreign policy designs for what he wishes to be the next administration, if his hundreds of millions of contribution dollars have anything to do with it. He'll be waiting for his ship to come in.
First, the corporate line for justification of one of the party line talking points of the proposed Ry-Ann budget outline. It can not be safely called "a plan", since it's too vague. "Corporate Tax Reform and Territoriality. The 2011 Simpson-Bowles report and the report of the President’s Export Council recommended that the United States move to a territorial tax system. We recognize that corporate tax reform, however, won’t happen without some fundamental issues being resolved (Road to Renewal, White House Jobs Council, 2011)."
"Not everyone agreed, however, with the report also stating that 'Some members of the Council, however, disagree with this point of view, arguing that a territorial system of taxing corporate income would strengthen incentives for companies to move investment and employment to lower-tax jurisdictions. They believe that, if the United States adopts a territorial system of taxation, it must be designed to prevent U.S. firms from exploiting U.S. markets while avoiding U.S. tax. They believe the U.S. corporate tax system must be designed to prevent such behavior. We are hopeful that such policy differences can be resolved as part of a broader, comprehensive tax reform initiative by policymakers (Tapper 2012)."
This might be what is in some of R-money's secreted strongboxes: "The U.S. technically has a “worldwide” tax system in which all profits of U.S. corporations are subject to U.S. taxes, but it undermines this rule by allowing taxes on offshore profits to be “deferred” until those profits are brought back to the U.S. (repatriated). Often, these offshore profits are never repatriated (Citizens for Tax Justice 2011)." Also remember that companies already had access to the offshore money by borrowing against them. But the Commodore keeps his ships' logs close to his tunic so as to keep from prying eyes.
(CTJ 2011) "The Treasury estimates that deferral of U.S. taxes on offshore corporate profits costs close to $50 billion each year, and many experts think this estimate is substantially understated. The current hybrid system (the 'deferral' system) causes two major problems. Both of these problems would get worse if Congress enacted a territorial system. Both would largely go away if Congress enacted a pure worldwide system."
(CTJ 2011) "The first problem is that deferral may give American corporations an incentive to move
operations and jobs offshore. Because the U.S. does not tax profits generated offshore (unless the profits are repatriated), corporations could pay less in taxes by moving production to a country with lower corporate income taxes."
(CTJ 2011) "The second major problem is that deferral creates an incentive for American corporations to
disguise their U.S. profits as “foreign” profits. They do this by engaging in transactions that shift their profits to subsidiaries in countries that tax the profits lightly or not at all (countries that serve as corporate tax havens). For example, a U.S. parent company may transfer a patent to its wholly owned subsidiary based in a tax haven and then tell the IRS that it has no profits because it had to pay huge fees to the subsidiary for the use of that patent. The subsidiary is thus claimed to have high profits — but the U.S. parent company can “defer” (not pay) taxes on those profits because they are (allegedly) generated abroad."
(CTJ 2011) "Under a pure worldwide tax system, corporations would have little or no tax incentive to move jobs offshore or to shift profits offshore using shady transactions involving tax havens, because the U.S. would tax profits of American corporations no matter where they are generated."
Moving to the worldwide system would bring it in line with the same principle that already applies to personal income, with exceptions for the Commonwealth of Puerto Rico and other unicorporated territories such as the other Commonwealth of the U.S. Virgin Islands (which are not subject to U.S. income tax on monies earned within their respective borders).
(CTJ 2011) "Some corporate lobbyists argue that lowering taxes on corporations (and any businesses) is the most important factor, but clearly there are many other factors that are as important or more important for creating jobs. Businesses flourish in the U.S. because of the infrastructure that makes commerce possible, the education system that provides a skilled workforce, the legal system and other public services that will not be possible if those who profit from them (including corporations) do not pay enough in taxes."
(CTJ 2011) "If the United States adopted a territorial system, the increased incentives to manipulate transfer pricing rules and expense allocation would result in a significant loss of revenue. President Obama’s Economic Recovery Advisory Board’s report on tax reform options cites 'rough estimates from the Treasury' that adopting a territorial system, without changing other rules, would reduce revenue by approximately $130 billion over ten years."
"Low Tax Strategies Aren’t Effective: These findings shouldn’t be surprising: tax cuts always have
consequences for public investments, and lower taxes generally lead to lower-quality public services and fewer public sector jobs. Providing businesses with a low-tax, low-service environment is not a winning
strategy for at attracting investment. Moreover, compared to other costs of doing business, state and local taxes are rather insignificant for the companies themselves (Institute on Taxation and Economic Policy 2011)."
(ITEP 2011) "In fact, business leaders will candidly admit that taxes are not very important in their location decisions. As Paul O’Neill, a former Alcoa executive, put it: 'I never made an investment decision based on the tax code...If you are giving money away I will take it. If you want to give me inducements for something I am going to do anyway, I will take it. But good business people do not do things because of inducements."
(ITEP 2011) "John Tyson, of Tyson Foods, noted that tax breaks had nothing to do with his company’s decision to locate a plant in Pine Bluff , Arkansas, rather than out of state. 'It [the location decision] was based purely on geography. Pine Bluff was in the right place. The tax credits didn’t make any difference.”
"Vice President Biden says “paying taxes is patriotic”, and the rich should pay their equal share – it’s the right thing to do. Not only do the über-wealthy rail against resetting their tax rates to the normal levels that existed before the Bush Tax Cuts, many use the US borders to give themselves even deeper tax breaks. The Paul Ryan Budget sanctions it and rewards it even more; Mitt Romney capitalizes on it (Karen Y, Veracity Stew 2012)."
Territoriality as tax reform, especially for our corporations "too big to tax", is an idea that needs to be deep sized, better yet sent to Davy Jones locker. And the HMS R-money turned into the Flying Dutchman.
Link to Excellent Relevant Segment of "The Ed Show":
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