US Firms moving abroad, US has the highest corporate taxes in the developed world. - Polidicks

[quote]More big U.S. companies are reincorporating abroad despite a 2004 federal law that sought to curb the practice. One big reason: Taxes. Companies cite various reasons for moving, including expanding their operations and their geographic reach. But tax bills remain a primary concern. A few cite worries that U.S. taxes will rise in the future, especially if Washington revamps the tax code next year to shrink the federal budget deficit. "We want to be closer to where our clients are," says David Prosperi, a spokesman for risk manager Aon plc, which relocated to the U.K. in April. Aon has told analysts it expects to reduce its tax rate, which averaged 28% over the past five years, by five percentage points over time, which could boost profits by about $100 million annually. Since 2009, at least 10 U.S. public companies have moved their incorporation address abroad or announced plans to do so, including six in the last year or so, according to a Wall Street Journal analysis of company filings and statements. That's up from just a handful from 2004 through 2008. The companies that have moved recently include manufacturer Eaton Corp., oil firms Ensco International Inc. and Rowan Cos., as well as a spinoff of Sara Lee Corp. called D.E. Master Blenders 1753. Eaton, a 101-year-old Cleveland-based maker of components and electrical equipment, announced in May that it would acquire Cooper Industries PLC, another electrical-equipment maker that had moved to Bermuda in 2002 and then to Ireland in 2009. It plans to maintain factories, offices and other operations in the U.S. while moving its place of incorporation—for now—to the office of an Irish law firm in downtown Dublin. When Eaton announced the deal, it emphasized the synergies the two companies would generate. It also told analysts that the tax benefits would save the company about $160 million a year, beginning next year. Eaton's chief executive, Alexander Cutler, has been a vocal critic of the corporate tax code. "We have too high a domestic rate and we have a thoroughly uncompetitive international tax regime," Mr. Cutler said on CNBC in January. "Let's not wait for the next presidential election" to change the rules. The moves by Ensco and Rowan, which operate offshore oil rigs, show how one company's effort to lower its tax rate can spur other shifts. In moving from Dallas to the U.K. in 2009, Ensco followed rivals such as Transocean Ltd., Noble Corp. and Weatherford International Ltd. that had relocated outside the U.S. The company said the move would help it achieve "a tax rate comparable to that of some of Ensco's global competitors." In fact, Ensco's tax rate has declined. In the second quarter, the company said its "effective tax rate" was 10.5%, down from 19% in 2009. The savings: more than $100 million a year. Around the time of Ensco's move, Rowan executives fielded questions from investors and analysts about their own tax rate. In February, Rowan answered the questions, announcing plans to move to the U.K. from Houston. "We're able to be competitive, with a low effective rate," says Suzanne Spera, the firm's director of investor relations. Fear of such moves is what prompted Congress to pass the 2004 law, which was backed by Democrats and some Republicans and included exceptions that some firms and advisers have sought to exploit. In June, the Internal Revenue Service tightened an exception that had allowed companies to move to countries in which they have substantial business activities. It will not prevent moves through a merger, such as Eaton's. Lawmakers of both parties have said the U.S. corporate tax code needs a rewrite and they are aiming to try next year. One shared source of concern is the top corporate tax rate of 35%—the highest among developed economies. By comparison, Ireland's rate is 12.5%. The Obama administration has proposed lowering the rate to 28%, while Republican rival Mitt Romney has proposed 25%. Critics of the tax code also say it puts U.S. companies at a disadvantage because it taxes their profits earned abroad. Most developed countries tax only domestic earnings. While executives would welcome a lower tax rate and an end to global taxation, some worry their tax bills could rise under other measures that could be included in a tax-overhaul package. U.S. multinationals often pay far less than 35% because of various breaks, including the option of deferring the payment of U.S. taxes on foreign earnings until they are brought to the U.S. Those companies could pay higher taxes under Obama administration proposals to limit the benefits of deferral. Rowan cited that potential change in announcing its move. Obama administration officials play down the significance of the recent company moves and say their proposals would encourage companies to stay in the U.S. In his State of the Union speech in January, President Barack Obama said that "it's time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America." For companies that leave the U.S., the appeal of lower taxes "is still there, but people now are also getting more concerned about where tax reform is going," says Bret Wells, a University of Houston law professor. Still, several key lawmakers hope to rewrite the tax code to give companies an extra incentive to stay in the U.S. Tax reform needs to "put American businesses in the best position to compete in the global economy while adding U.S. jobs." said Sen. Max Baucus (D., Mont.), the Senate Finance Committee chairman, in a recent statement. And House Ways and Means Chairman Dave Camp (R., Mich.) said in a recent statement that "comprehensive tax reform that lowers rates and transitions the U.S. to a territorial approach that is used by our global competitors is critical to making America a more attractive place to invest and hire."[/quote] Interesting and relevant...very true as well. Everyone in government and academia knows this is true but its not a easy thing to discuss since lots of people inherently dislike corporations and it's difficult to blame them for that as well. Both Obama and Romney are planning to lower the Corporate tax rates, though neither seems to have said much about how they would actually reform the system by closing loopholes either. [img]http://cdn.washingtonexaminer.biz/cache/w620-091662f5b0373373dd69c719a0c4e125.jpg[/img] [url]http://finance.yahoo.com/news/u-firms-move-abroad-024200566.html[/url] [url]http://washingtonexaminer.com/were-no.-1-in-highest-corporate-taxes/article/424571[/url]

what? I would think that we would have the lowest.

I think they should give lower tax rates on the condition that they'll invest in the US. [editline]31st August 2012[/editline] [QUOTE=The Kakistocrat;37485340]what? I would think that we would have the lowest.[/QUOTE] They have big legal teams that find loopholes and effectively reduce it or eliminate it altogether.

[QUOTE=Lambeth;37485342]I think they should give lower tax rates on the condition that they'll invest in the US. [editline]31st August 2012[/editline] They have big legal teams that find loopholes and effectively reduce it or eliminate it altogether.[/QUOTE] While there certainly are some notable examples of corporations really being able to cheat their way though the system, I don't think all of them do, or are able to. Considering many firms are moving abroad because of this, like the article pointed out. Some anecdotal evidence, but the IS company I was interested in interning to actually moved their headquarters to London because one of the heads said the taxes over there are lower than they are in the US.

Is this a surprising thing?

All that socialist public healthcare etc happening in the USA is clearly terrible for the economy and drives up taxes. As you can see, companies are moving to countries with a more free market and less socialism. oh wait

[QUOTE=Catdaemon;37485581]All that socialist public healthcare etc happening in the USA is clearly terrible for the economy and drives up taxes. As you can see, companies are moving to countries with a more free market and less socialism. oh wait[/QUOTE] wait until noble sees thi- [quote]In moving from Dallas to the U.K. in 2009, Ensco followed rivals such as Transocean Ltd., [B]Noble Corp.[/B] and Weatherford International Ltd. that had relocated outside the U.S. The company said the move would help it achieve "a tax rate comparable to that of some of Ensco's global competitors."[/quote] fuck

[QUOTE=Catdaemon;37485581]All that socialist public healthcare etc happening in the USA is clearly terrible for the economy and drives up taxes. As you can see, companies are moving to countries with a more free market and less socialism. oh wait[/QUOTE] the countries still have lower corporate taxes. And if you read the article, the companies are still based in America, just incorporated in Ireland or other countries. They pay their low corporate taxes, our low income/payroll taxes.

Higher than Sweden and Norway? I am seriously baffled.

[QUOTE=Lamar;37485424]While there certainly are some notable examples of corporations really being able to cheat their way though the system, I don't think all of them do, or are able to. Considering many firms are moving abroad because of this, like the article pointed out. Some anecdotal evidence, but the IS company I was interested in interning to actually moved their headquarters to London because one of the heads said the taxes over there are lower than they are in the US.[/QUOTE] GE, one of the biggest corporation in america, did. They paid no taxes in 2010.

[QUOTE=The Kakistocrat;37485611]the countries still have lower corporate taxes. And if you read the article, the companies are still based in America, just incorporated in Ireland or other countries. They pay their low corporate taxes, our low income/payroll taxes.[/QUOTE] I wasn't really being serious, I just find it hilarious that they're moving to the UK of all places after all the crap coming out of your media about how companies would leave if taxes increase due to 'socialism'. Also, I believe if they're incorporated in the UK they pay tax on payments made to staff abroad.

[QUOTE=King Tiger;37485647]Higher than Sweden and Norway? I am seriously baffled.[/QUOTE] Sweden and Norway probably lowered theirs to try and get corporations to move in.

[QUOTE=Lambeth;37485661]GE, one of the biggest corporation in america, did. They paid no taxes in 2010.[/QUOTE] yep and that's why we need reform. No candidate has said how they would do this in detail either. Obama has been in office in 4 years and has done nothing about it, although he keeps mentioning how he plans to create reform. Romney says he wants to create reform, but again - no details.

Aren't effective US corporate tax rates are some of the lowest in the world?

How about we close the loopholes and lower tax rates at the same time, so we actually get the taxes but they're not a burden? Oh wait that's logic that has no place in American politics.

[QUOTE=Metalcastr;37485901]How about we close the loopholes and lower tax rates at the same time, so we actually get the taxes but they're not a burden? Oh wait that's logic that has no place in American politics.[/QUOTE] but closing loopholes requires congress to function like a professional organization

[QUOTE=Metalcastr;37485901]How about we close the loopholes and lower tax rates at the same time, so we actually get the taxes but they're not a burden? Oh wait that's logic that has no place in American politics.[/QUOTE] think about the poor tax preparation industry. Closing those loopholes would put them out of a job.

[QUOTE=Metalcastr;37485901]How about we close the loopholes and lower tax rates at the same time, so we actually get the taxes but they're not a burden? Oh wait that's logic that has no place in American politics.[/QUOTE] Y'know, Ron Paul wanted to drastically lower the corporate tax rate :v:

I don't think this is about the tax rate as much as it's about massive loopholes for tax evasion. We could cut it to 10% tomorrow and companies would still try to incorporate in Bermuda to avoid paying [i]any[/i] taxes. It's not because they're suffering under a massive Democratic tax burden, it's that they're just fucking greedy and would do this regardless of what the rate actually was.

Impose steep tariffs on all former US companies. Reduce taxes for companies producing goods domestically. Further reduce them for companies keeping a certain percentage of their employees in country, with different tiers of tariffs for different percentages of employees. This calculation would include all holdings and associated corporations. Breaking your corporation down into smaller chunks in order to fuck with the numbers would not affect the calculations. Attempts to game the system would be met with major prison time and other major repercussions such as the company being forced to surrender control to the feds until it rectifies whatever issue has arisen or can fold the current goods and employees into another company. WE ARE IN CONTROL. Issues aside, the United States still kicks around a shit ton of money. Losing us as a market due to tariffs is a bad plan. Even ignoring my solution, there are a thousand others (probably ones which are way better) that could take its place. We have the ability to make outsourcing and setting up in tax havens a very unpleasant activity.

[QUOTE=Used Car Salesman;37488667]I don't think this is about the tax rate as much as it's about massive loopholes for tax evasion. We could cut it to 10% tomorrow and companies would still try to incorporate in Bermuda to avoid paying [i]any[/i] taxes. It's not because they're suffering under a massive Democratic tax burden, it's that they're just fucking greedy and would do this regardless of what the rate actually was.[/QUOTE] but with a 10% tax rate, many companies would still be willing to pay it. With our current 35%, companies have decided it's just to much.

[QUOTE=Used Car Salesman;37488667]I don't think this is about the tax rate as much as it's about massive loopholes for tax evasion. We could cut it to 10% tomorrow and companies would still try to incorporate in Bermuda to avoid paying [i]any[/i] taxes. It's not because they're suffering under a massive Democratic tax burden, it's that they're just fucking greedy and would do this regardless of what the rate actually was.[/QUOTE] Corporations act like the people who own them, and if it was lower I think a lot more would be willing to pay that 10%. The logic is the same as lowering piracy by lowering prices. [editline]1st September 2012[/editline] [QUOTE=King Tiger;37485647]Higher than Sweden and Norway? I am seriously baffled.[/QUOTE] Nah, we have decent corporate tax. Sweden has a really high income tax and Norway has a really high sales tax.

[QUOTE=GunFox;37488790]Impose steep tariffs on all former US companies. We have the ability to make outsourcing and setting up in tax havens a very unpleasant activity.[/QUOTE] Sounds great if liberty or freedom aren't your ideological aims. [editline]1st September 2012[/editline] Why are the some of the same people applauding the outrageous tax hikes for the rich in France, now decrying this? They both have similar effects. People like high taxes until all productive interest leaves and jobs fall.

lowering taxes does not necessarily equal more jobs though [editline]1st September 2012[/editline] I have no evidence that these firms would create jobs if taxes were lowered. I can't accept that sort of thing on faith.

[QUOTE=Lambeth;37492240]lowering taxes does not necessarily equal more jobs though [editline]1st September 2012[/editline] I have no evidence that these firms would create jobs if taxes were lowered. I can't accept that sort of thing on faith.[/QUOTE] The idea that lower taxes means more jobs really is just a myth, a busted one at that. Lowering taxes does nothing to inspire growth.

[QUOTE=Lambeth;37492240] I have no evidence that these firms would create jobs if taxes were lowered. I can't accept that sort of thing on faith.[/QUOTE] You have the evidence that they are leaving because of higher taxes. It's not about trickle down economics in this sense. It's about preserving the jobs already established.

[QUOTE=GunFox;37488790]Impose steep tariffs on all former US companies. Reduce taxes for companies producing goods domestically. Further reduce them for companies keeping a certain percentage of their employees in country, with different tiers of tariffs for different percentages of employees. This calculation would include all holdings and associated corporations. Breaking your corporation down into smaller chunks in order to fuck with the numbers would not affect the calculations. Attempts to game the system would be met with major prison time and other major repercussions such as the company being forced to surrender control to the feds until it rectifies whatever issue has arisen or can fold the current goods and employees into another company. WE ARE IN CONTROL. Issues aside, the United States still kicks around a shit ton of money. Losing us as a market due to tariffs is a bad plan. Even ignoring my solution, there are a thousand others (probably ones which are way better) that could take its place. We have the ability to make outsourcing and setting up in tax havens a very unpleasant activity.[/QUOTE] are we back in the 17th century [editline]1st September 2012[/editline] [QUOTE=Lambeth;37492240]lowering taxes does not necessarily equal more jobs though [editline]1st September 2012[/editline] I have no evidence that these firms would create jobs if taxes were lowered. I can't accept that sort of thing on faith.[/QUOTE] why wouldn't they

[QUOTE=GunFox;37488790]Impose steep tariffs on all former US companies. Reduce taxes for companies producing goods domestically. Further reduce them for companies keeping a certain percentage of their employees in country, with different tiers of tariffs for different percentages of employees. This calculation would include all holdings and associated corporations. Breaking your corporation down into smaller chunks in order to fuck with the numbers would not affect the calculations. Attempts to game the system would be met with major prison time and other major repercussions such as the company being forced to surrender control to the feds until it rectifies whatever issue has arisen or can fold the current goods and employees into another company. WE ARE IN CONTROL. Issues aside, the United States still kicks around a shit ton of money. Losing us as a market due to tariffs is a bad plan. Even ignoring my solution, there are a thousand others (probably ones which are way better) that could take its place. We have the ability to make outsourcing and setting up in tax havens a very unpleasant activity.[/QUOTE] Lmao protectionism.

[QUOTE=Strider*;37492307]You have the evidence that they are leaving because of higher taxes. It's not about trickle down economics in this sense. It's about preserving the jobs already established.[/QUOTE] The unemployment rates of the low corporate tax countries in the graph and the unemployment rates of the US aren't dramatically different, if not higher for some less rich countries. Edit. Theres a million other factors so i (edit:) DON'T think higher corporate taxes will wreck the US economy.

I will never understand why our government skews the differences between personal Income and Corporate Taxes so badly. Ban all restrictions on international trade, end our embargoes, Lower the taxes on companies, and institute a flat income tax. So we can fuckin' move on to deal with more important shit than basic 9th grade economics.