Ok, imagine if you will that you run a company.  Company X, lets say.  You make widgets, and you sell them both here and, say, Italy.  There is also Company Y – from Italy – who makes and sells widgets both there and in the USA.

You both make your product, sell them, and make a profit.  Now, Company Y pays it’s US (and italian) taxes, and then takes the extra profit back home, investing in it’s business and growing it.  You pay your Italian taxes, and your US taxes, and bring that Italian profit back to the US…

And you pay taxes again.

The USA is, out of every advanced or semi-advanced country on the planet that will tax your happy ass twice.  You will pay the US corporate tax rate of 35% (the highest in the world) on anything money you bring back into the US.

Now, the logical thing to do, if you’re a US company, is to keep that Italian profit in Italy (or where ever you got it), growing your business elsewhere (bigger factory for your Italian widgets, what have you).  But oh no.  The US can’t have you doing that, so they are now looking at ways to impose that 35% tax rate on money you don’t even bring back to the US.  Be a US company, and they will find a way to get their money…

So what do you do?

Well, the smart idea would be to not be a US based company…  You take your HQ out of the US, incorperate elsewhere, and thus not only avoid the forced 35% tax on profit you don’t bring in, but on what you do (since you won’t be bringing in anything).  You’ll just pay taxes on what you sell here, and then the money leaves, never to grow US production.

I can’t imagine why companies would shift HQs to Dubai or the likes.  Honestly, I have no idea.

US Tax Cod – killing us one dollar at a time.

San Jose councilwoman Madison Nguyen survived a recall election on Tuesday, as voters in her district voted down the recall by a 55-45 margin.  Nguyen had angered a vocal minority of constituents by favoring the name “Saigon Business District” over “Little Saigon” for a Vietnamese neighborhood.  The majority, however, saw the recall effort as a petty and pointless.

Fortunately San Jose is largely unaffected by the tumbling economy, drastic state budget cuts, and other financial problems that plague similar large municipalities.  The nation’s tenth largest city can easily afford to piss away $500,000 on the special election (in addition to the $350,000-$400,000 spent by both campaigns.)

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