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I am currently working on a project with the CFO of the company where I work and he talked to me about how high corporate tax rates in the U.S. are crippling the incentive of businesses to locate here if they can do so in another country where other factors, such as abilty to get supply from vendors, get product to customers, quality of the work force, political stability, etc. are equal.
I used this conversation as a springboard for further research and found a lot that bears out what he told me.

Here's a couple of items I turned up:

http://www.forbes.com/sites/realspin/2014/04/30/pfizer-astrazeneca-shows-us-its-high-time-to-reform-the-corporate-tax-code/

http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx

The U.S. comes out as having one of the highest tax rates in the world.

What are the thoughts here?

Canada has lower rates. Go figure.

 Frazzled wrote:
Canada has lower rates. Go figure.

I think only Japan and the Arab Emerates have higher tax rates.

You really shouldn't be surprised we have the highest Corporate taxes in the world.

Its also not just taxes that are driving corporations to move elsewhere. Its less regulations to follow, easier supply logistics, cheaper labor, etc... The US has the absolutely strictest environmental laws in the world, workers demand high levels of pay+benefits, etc...

All these things together make it a toxic environment for businesses.


We shouldn't totally abandon regulations and taxes and pay+benefits, but we should dial them down. Otherwise we may totally lose a bunch of jobs.

 Grey Templar wrote:
You really shouldn't be surprised we have the highest Corporate taxes in the world.

Its also not just taxes that are driving corporations to move elsewhere. Its less regulations to follow, easier supply logistics, cheaper labor, etc... The US has the absolutely strictest environmental laws in the world, workers demand high levels of pay+benefits, etc...

All these things together make it a toxic environment for businesses.


We shouldn't totally abandon regulations and taxes and pay+benefits, but we should dial them down. Otherwise we may totally lose a bunch of jobs.

I don't advocate totally abandoning regulations either since I enjoy clean air and water. I think you and I are on a close set of thoughts here.

You are right about losing jobs. The CFO was making an excellent case for why companies are discouraged from locating in the U.S. A lot of our vendors are overseas, avoiding U.S. taxes, and the supply chain would be easier if we were there, with the company benefiting on just the supply and tax levels alone.

Yup.

For example, that damned Delta Smelt is basically responsible for the fact farmers in California can't get the water they are legally entitled to. Its not even a native! It was introduced to the delta from elsewhere. it has no commercial value and its not even a necessary part of the ecosystem(its non-native after all)

My family can't even have a burnpile to get rid of our deadfall or even have a fire in our fireplace because people in Oakland have respiratory problems. I guarantee us burning a little wood in the North Bay is not responsible for the poor air quality, its just adding a very little to the mess the city causes.

Our problems has never been the "tax rate".

Our problem is the "effective tax rate", and after using all the credits and loopholes and off-shore accounts and every other trick that is written into the tax code you will find that the US has a very low tax rate that is actually getting paid.

Tax reform doesn't need to change the tax rates. Tax reform just needs to burn 75% of the tax code that is already there.

 d-usa wrote:
Our problems has never been the "tax rate".

Our problem is the "effective tax rate", and after using all the credits and loopholes and off-shore accounts and every other trick that is written into the tax code you will find that the US has a very low tax rate that is actually getting paid.

Tax reform doesn't need to change the tax rates. Tax reform just needs to burn 75% of the tax code that is already there.

Stop advocating taking money from from the rich D gosh.

 d-usa wrote:
Our problems has never been the "tax rate".

Our problem is the "effective tax rate", and after using all the credits and loopholes and off-shore accounts and every other trick that is written into the tax code you will find that the US has a very low tax rate that is actually getting paid.

Tax reform doesn't need to change the tax rates. Tax reform just needs to burn 75% of the tax code that is already there.

Here is another study:

http://taxfoundation.org/article/us-corporate-effective-tax-rate-myth-and-fact

It appears Japan is going to reduce it's corporate tax rate:

http://www.bloomberg.com/news/2014-04-30/nishimura-says-japan-to-reduce-corporate-tax-rate-by-april-2015.html

d-usa, You make an interesting point on effective tax rates, but do not other countries offer the same kind of incentives to corporations? I confess a great deal of ignorance in this, but it was a fairly illuminating conversation I had with the CFO.

I'm not against reducing, as long as we get rid of all the other crap with it.

A simpler tax-code at half the rate would probably give us more money than our "higher" tax rate with all the loop holes.

A counter article though:

http://www.usatoday.com/story/opinion/2014/05/01/pfizer-corporate-tax-economic-policy-institute-editorials-debates/8583713/

Pfizer paid a tax rate of 0.9%, how much lower do they want us to go?

 d-usa wrote:
I'm not against reducing, as long as we get rid of all the other crap with it.

A simpler tax-code at half the rate would probably give us more money than our "higher" tax rate with all the loop holes.

A counter article though:

http://www.usatoday.com/story/opinion/2014/05/01/pfizer-corporate-tax-economic-policy-institute-editorials-debates/8583713/

Pfizer paid a tax rate of 0.9%, how much lower do they want us to go?

Good article, but this link in it caught my eye:

http://www.usatoday.com/story/opinion/2014/05/01/pfizer-corporate-tax-code-astrazeneca-editorials-debates/8583663/

No matter what we agree on here, the fact remains that the tax code in this country is chasing companies from our shores. Somebody'd best get their gak together or we're going to be standing here what happened to all the jobs.


Automatically Appended Next Post:
Then again, we have this veiw:

http://www.usatoday.com/story/opinion/2014/05/01/pfizer-corporate-tax-economic-policy-institute-editorials-debates/8583713/


Automatically Appended Next Post:
The thing I have against this proposal is companies might not even consider the U.S. as a place to start a business if it's made illegal to go overseas.

Where do we stop though?

Corporate welfare? Pay them to stay in our country?

As long as they have to pay a single penny they are going to try to get out of paying that penny. And many of these companies have a tax rate of less than 15%, quite a few of them much less.

http://www.washingtonpost.com/business/economy/post-analysis-of-dow-30-firms-shows-declining-tax-burden-as-a-share-of-profits/2013/03/26/3dfe5132-7b9a-11e2-82e8-61a46c2cde3d_story.html

http://www.washingtonpost.com/wp-srv/special/business/dow-30-taxes/

I paid a higher effective tax rate than many of these companies that are complaining...

 d-usa wrote:
Where do we stop though?

Corporate welfare? Pay them to stay in our country?

As long as they have to pay a single penny they are going to try to get out of paying that penny. And many of these companies have a tax rate of less than 15%, quite a few of them much less.

http://www.washingtonpost.com/business/economy/post-analysis-of-dow-30-firms-shows-declining-tax-burden-as-a-share-of-profits/2013/03/26/3dfe5132-7b9a-11e2-82e8-61a46c2cde3d_story.html

http://www.washingtonpost.com/wp-srv/special/business/dow-30-taxes/

I paid a higher effective tax rate than many of these companies that are complaining...

Some definite hard questions that are going to have to find answers if we don't want to risk losing large companies. I can't even pretend to know what to say here.

Corporation tax is only one of the burdens on a business. There are all the other taxes and regulations to be followed, too, which in other countries may add up to a higher burden.

The advantageous factors should not be ignored, though. It wouldn't be hard for the US investment banking industry to relocate to London, for example, but the US economy is the largest in the world and the problems of trying to supply it from a 3,000 mile, eight hour time difference, means that the banks prefer to stay in New York.

Meanwhile London based banks moan continuously about leaving to go to Switzerland, because of the relatively high personal tax on pay and bonuses in the UK.

 Kilkrazy wrote:
Corporation tax is only one of the burdens on a business. There are all the other taxes and regulations to be followed, too, which in other countries may add up to a higher burden.

The advantageous factors should not be ignored, though. It wouldn't be hard for the US investment banking industry to relocate to London, for example, but the US economy is the largest in the world and the problems of trying to supply it from a 3,000 mile, eight hour time difference, means that the banks prefer to stay in New York.

Meanwhile London based banks moan continuously about leaving to go to Switzerland, because of the relatively high personal tax on pay and bonuses in the UK.

That's why I stated in my original post about all other factors being equal and listed some of them. These would very surely figure into a corporation's calculations.

Yes, you mentioned them and dismissed them to say that the USA has one of the highest corporation tax rates in the world, as if this is the key factor.

 Kilkrazy wrote:
Yes, you mentioned them and dismissed them to say that the USA has one of the highest corporation tax rates in the world, as if this is the key factor.

Not meaning to be dismissive, just out to get a bit educated on opinions. I've been hearing and reading strong points from both sides, but the fact remains that there are big companies being attracted to other countries by the tax climate.

Relapse wrote:
No matter what we agree on here, the fact remains that the tax code in this country is chasing companies from our shores. Somebody'd best get their gak together or we're going to be standing here what happened to all the jobs.

And see here I thought it was the slave labor wages that invited companies to move to 3rd world countries. Now I learn it's our easily exploitable tax codes.

I mean why else would a company like Apple both pay slave wages to migrant Chinese laborers and pay American tax rates and not Irish? Oh wait.

DutchWinsAll wrote:

Relapse wrote:
No matter what we agree on here, the fact remains that the tax code in this country is chasing companies from our shores. Somebody'd best get their gak together or we're going to be standing here what happened to all the jobs.

And see here I thought it was the slave labor wages that invited companies to move to 3rd world countries. Now I learn it's our easily exploitable tax codes.

I mean why else would a company like Apple both pay slave wages to migrant Chinese laborers and pay American tax rates and not Irish? Oh wait.

True that lower wages in some countries might be the decider in some cases, but if a lower skill level or other difficulties exist, it's not going to be the thing that will draw a company, as was being discussed earlier.

Relapse wrote:

DutchWinsAll wrote:

Relapse wrote:
No matter what we agree on here, the fact remains that the tax code in this country is chasing companies from our shores. Somebody'd best get their gak together or we're going to be standing here what happened to all the jobs.

And see here I thought it was the slave labor wages that invited companies to move to 3rd world countries. Now I learn it's our easily exploitable tax codes.

I mean why else would a company like Apple both pay slave wages to migrant Chinese laborers and pay American tax rates and not Irish? Oh wait.

True that lower wages in some countries might be the decider in some cases, but if a lower skill level or other difficulties exist, it's not going to be the thing that will draw a company, as was being discussed earlier.

True that lower corporate tax rates in some countries might be the decider in some cases, but if a lower tax rate rate is offset by the availability of loopholes in America, it's not going to be the thing that will draw a company away.

Listening to a CFO talk about tax rates is as valid as listening to a Mexican drug lord talk about drug policies.

I was reading this thread and I wanted to make sure I wasn't having wild hallucinations. Did somebody really say american workers demand some of the best benefits in the world? I mean I could have sworn I read that in here somewhere, but it's just impossible. I really better go see a doctor before I start seeing posts about the North Korean space program reaching the Andromeda galaxy.

 d-usa wrote:
Listening to a CFO talk about tax rates is as valid as listening to a Mexican drug lord talk about drug policies.

I've known the man for 15 years. He's always told it like he saw it, whether times were good or bad. He is not given to lies.

Our worker protection laws and benefits are gak. Absolute horrible gak. Any other developed work would look at our rights and protections for workers and laugh at us for them.

But anything to fix it would be socialism and anti-business, and people would have to realize how bad they are being treated as workers to begin with compared to the rest of the modern world.

But hey, less taxes for corporations!


Automatically Appended Next Post:

Relapse wrote:

 d-usa wrote:
Listening to a CFO talk about tax rates is as valid as listening to a Mexican drug lord talk about drug policies.

I've known the man for 15 years. He's always told it like he saw it, whether times were good or bad. He is not given to lies.

I'm not accusing him of lying. He is telling the truth as it relates to his job. His responsibility is to get out of paying any penny that he can. He has no responsibility towards the US, he has zero responsibility to any of the workers, his only responsibility is to make as much money as possible for the shareholders. That includes cutting expenses, from paying less for raw materials to paying less taxes. If he can increase profits by 1% then he will try to do that, it doesn't matter who he screws over in the process. That's not him lying, that's him doing his job.

The fact that he claims that business is suffering the actual tax rate makes it clear he is twisting the truth though. It's not lying because the tax rate is what it is, but he knows that business are not paying that.

 d-usa wrote:
Has worker protection laws and benefits are gak. Absolute horrible gak. Any other developed work would look at our rights and protections for workers and laugh at us for them.

But anything to fix it would be socialism and anti-business, and people would have to realize how bad they are being treated as workers to begin with compared to the rest of the modern world.

But hey, less taxes for corporations!

What do you mean by " Has worker protection laws and benefits are gak"? Or your last sentence, what is "developed work". I think I know what you're saying, but I want to make sure.

Never mind, I caught the revision!

The second part of your post brings some perspective, because in the end, it's the shareholders that call the tune, because they are supplying the capital to get the business going. If it is profitable for a company to go elsewhere to get that extra few percentage points from saving money on taxes, with everything else figured in, then that's what will happen.
It's not a scenario I enjoy either, but it is the reality as is seen by many businesses.