The Jury Talks Back

3/4/2009

Why companies will leave the US

Filed under: Uncategorized — Scott Jacobs @ 6:18 am

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.

7 Comments

  1. The USA is the only place, out of every advanced or semi-advanced country on the planet, that will tax your happy ass twice.

    seems like you dropped a few words there…..

    and although the it does smell like a dead fish, i believe it’s “Tax Code”.

    red”i’ve never had a typo”c1c4

    Comment by redc1c4 — 3/4/2009 @ 9:29 am

  2. other than that, you must be a genius, because the wife and i came to the same conclusion over dinner the other night. %-)

    Ear Leader is out to destroy America as we know it.

    Comment by redc1c4 — 3/4/2009 @ 9:30 am

  3. http://www.fairtax.org

    Make sure you go past the splash page about the petition to the real homepage.

    Comment by Buzz Killington — 3/4/2009 @ 9:38 am

  4. You’re right Red, I did drop a few words…. I typed that out in a huge hurry right before I left for class. When I get home this afternoon, I’ll have to fix it…

    Comment by Scott Jacobs — 3/4/2009 @ 9:47 am

  5. CA used to do the same thing with companies with facilities in other states, and countries.
    They would even attempt to tax companies that weren’t HQ’d here for their out of state revenue as long as they had some physical presence within CA. Madness!

    And they wonder why they have such a gap between revenues and spending?

    Comment by AD - RtR/OS — 3/4/2009 @ 10:00 pm

  6. I think it was LA in CA that tried to charge a company property taxes on the satelites they had in orbit because the company HQ was in LA. I would have closed the building the next day and fired every one and put a huge bill board out front explaining why.

    Comment by Have Blue — 3/10/2009 @ 8:38 pm

  7. That was Hughes Satellite. Another Democrat idea.

    Comment by PCD — 3/11/2009 @ 12:23 pm

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