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dharma
12-15-2008, 12:13 PM
INVESTOR'S BUSINESS DAILY
Posted 12/12/2008

Energy: Another day, another oil company fleeing the country. No, this isn't Ecuador, the banana republic that just defaulted on its debt after chasing out investors. It's the United States, and what we're seeing is self-defense.

Much political hay has been made in Congress about "unpatriotic" corporations that move operations abroad. Weatherford International is the latest, taking its headquarters from Houston to Switzerland. The oil services company said that it wants to be closer to its markets. But what it really meant was that it no longer saw the future in the U.S.

In a political atmosphere of blaming corporations, it's no wonder. Halliburton fled to Dubai in 2007. Tyco International, Foster Wheeler and Transocean International all went to Switzerland. As a pattern emerges, America's global standing diminishes, in part because it's based on the willingness of companies to invest. It's an especially bad sign when domestic companies flee.

"The U.S. is an important market," Weatherford CEO Bernard J. Duroc-Danner told the Houston Chronicle Thursday. But, "it's just a market. It's not the primary market."

How does that sound for a loss of global leadership? If that's not clear enough, try this: "In the hierarchical pecking order, (Houston's) not going to be Rome anymore."

What accounts for this vote of no confidence in the U.S.?

Start with the demonization of oil companies. Executives have been hauled before Congressional star chambers, held up to abuse and ridicule, and then blamed for high oil prices as if they wanted to kill their markets. Rising global demand, nationalizations and Congress' failure to open the country to drilling go ignored.

Huge companies such as Exxon Mobil, whose market cap exceeds the GDP of most countries, create $100 billion in earnings in quarters when oil prices soar. It looks high, but over the years, the industry's average returns, at 9%, are less than other industries.

Nevertheless, Exxon's profits are evidence of its success at extracting oil from miles below the earth's surface, even underwater, and from unbelievably hostile environments, such as the Arctic. Instead of being objects of national pride for their productivity and efficiency, and subjects of heroic Hollywood movies, their success is considered to be dishonest.

Congressional hostility affects oil companies' operations abroad, too: Exxon, remember, noted that Congress' animus toward oil profits directly encouraged Hugo Chavez's uncompensated expropriations of $1 billion of Exxon's assets in Venezuela, which drove oil prices higher.

With an expanded Democratic Congress and an incoming Democratic president determined to create "patriot corporations," it's no surprise to see companies try to get out while they can. Make no mistake - it's investment fleeing the country. As this goes, foreign capital could flee next.

Congress' abuse sets the political tone for the worst to come.

First, oil companies, like all corporations, endure the second-highest taxation in the developed world (39.25% of their income), which dampens their competitiveness. The 2007 OECD average is 27.6% and falling. Worse still, U.S. firms are taxed on operations around the world, unlike the global standard, making a move of headquarters a defensive move.

Meanwhile, politicians openly say they want to hike taxes on oil firms. President-elect Obama seems to have backed off, but questions remain as to whether he can stand up to a rapacious and economically ignorant Congress that hasn't.

Second, Big Labor is feeling its oats, swaggering confidently with newfound political power. United Steelworkers approved a "national oil bargaining policy" for higher wages and beefed up its "strike defense fund," both of which point to plans to squeeze oil companies, if not launch strikes.

"You have to prepare your membership for 2009," according to USW International Vice President Gary Beevers on a union Web site. "The oil companies are ready for us; we have to be ready for them." With Congress at their back, oil companies are unlikely to lose.

None of this portends well for the U.S. business environment. That's why top-performing firms, such as Weatherford, are exiting. Until Congress learns to appreciate and value oil firms, this will continue, leading to less U.S. investment and influence as more competitive climes beckon.

http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=313977823484200

Jackpine Savage
12-15-2008, 01:05 PM
Probably the most significant thread I've read in quite some time. Thanks.

frodo
12-15-2008, 01:43 PM
And it's all happened on George W Bush's watch as well.

Seriously though, corporations go where the business is. The cheap shot about taxation and labour unions is just that, a cheap shot, especially when you know what people in the oil industry are paid.

leistb
12-15-2008, 02:25 PM
And it's all happened on George W Bush's watch as well.

Seriously though, corporations go where the business is. The cheap shot about taxation and labour unions is just that, a cheap shot, especially when you know what people in the oil industry are paid.

Of course none of this has to do with the US having one of the highest corporate tax rates and a Democratically-controlled congress (as of late) that won't lower those rates. Clearly, it must entirely be the fault of Bush.

http://www.taxfoundation.org/news/show/23627.html

Global Survey of Business Tax Rates Show U.S. Increasingly Uncompetitive




KPMG Study Shows American Corporate Tax Rate Trending Well Above International Average

Washington, DC, September 18, 2008 - KPMG, a well-known international accounting firm, released its annual survey of corporate and indirect tax rates for 2008, showing that the U.S. corporate income tax rate was higher than all other global regions, 14.1 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations.

In Tax Foundation Fiscal Fact No. 145, "KPMG Study Finds U.S. Corporate Tax Rate Higher Than Every Global Region," Tax Foundation President Scott Hodge explains that America's stagnant business tax system is potentially harmful to America's economic competitiveness in the global marketplace.

"Of the 106 countries surveyed, only the United Arab Emirates (55 percent), Kuwait (55 percent), and Japan (40.69 percent) impose a higher corporate tax rate than the combined rate of 40 percent in the U.S.," says Hodge. "What this says about America's tax competitiveness is not good."

According to the KPMG report, 23 countries have lowered their corporate tax rates this year, and no nation has raised its rate since last year. Last week, for instance, Sweden announced a series of proposals to improve its business climate, including a plan to cut its corporate tax rate from 28 percent to 26.3 percent. A September 17, 2008 Industry Week article, "Sweden Announces Income Tax Cuts to Boost Jobs," explains, "Since coming to power in the autumn of 2006, the Swedish government has launched a series of measures aimed at inciting Swedes to return to the job market instead of living off of state subsidies."

"The U.S. rate was higher than all other global regions in 1999 and the difference is even more dramatic today," Hodge states. "If the Swedes now recognize that taxes matter to a country's business climate and incentives to work, then when will America's political class?"

This KPMG survey comes on the heels of the Tax Foundation's CompeteUSA project, a campaign to raise public awareness of America's high business taxes and how our business tax system might be affecting our competitiveness, wages and living standards.

Recent OECD studies show U.S. corporate income taxes are 50 percent higher than the average among our counterparts in the industrialized world, and that corporate taxes are the single most harmful tax to GDP growth, more so than personal income taxes or consumption taxes. Last month, the Tax Foundation released a revised summary showing that the U.S. federal corporate income tax quietly taps family pocketbooks for nearly $370 billion per year in the form of higher prices, lower wages and poorer return on investment.

frodo
12-15-2008, 02:29 PM
Don't tax you, don't tax me! Tax that fellow behind the tree!

Taxes fund Government spending. Perhaps if Defence spending was lowered to something like the world average, taxes would be a lot lower.

Sonny
12-15-2008, 02:46 PM
Since Income tax from all corporations only amounts to 1/8 of the total IRS revenues. I wonder if eliminating all corporation income taxes would have made much difference? There might be other factors involved in moving abroad besides taxes.

leistb
12-15-2008, 04:04 PM
Don't tax you, don't tax me! Tax that fellow behind the tree!

Taxes fund Government spending. Perhaps if Defence spending was lowered to something like the world average, taxes would be a lot lower.

I agree about the government spending and that taxes support that. With defense spending somewhere between 3% and 4% of GDP I don't think that is an unreasonable amount -especially with the US playing protection force in various capacities over the years when the rest of the world stands by and participates very little (the wisdom of the Iraq and Afghanistan wars being a separate issue).

My contention is the spending needs to be cut, the lobbying influence needs to be severely hampered, health care needs to be reformed and not socialized and legal reform needs to happen. Directing funds (taxes collected) to productive endeavors that actually contribute to the bottom line is something I could get behind 100%. Unfortunately, both sides of the aisle are guilty as hell of raping the American tax payer with wasteful spending and to simply brush it aside by saying the Bush administration or the Clinton administration or Mickey Mouse's administration is at fault is fallacious.

Sonny
12-15-2008, 06:16 PM
I agree about the government spending and that taxes support that. With defense spending somewhere between 3% and 4% of GDP I don't think that is an unreasonable amount -especially with the US playing protection force in various capacities over the years when the rest of the world stands by and participates very little (the wisdom of the Iraq and Afghanistan wars being a separate issue).

snip)

I fail to see the relevance of the ratio of government spending on defense divided by the total GDP of the country. (3% to 4% )

Whereas in your first sentence you do acknowledge correctly the relationship of government spending is to the taxes that support that spending.

Suffice it say that the US governments 2009 spending for Military and non military national defense and security will be greater than all the personal income taxes collected by IRS for 2009.
(more than 100%)
(source 2009 presidents budget)

BirdGuano
12-15-2008, 06:45 PM
Don't tax you, don't tax me! Tax that fellow behind the tree!


I believe the government's looking to tax all three plus the tree and the land that the tree grows on.

Ought Six
12-15-2008, 07:10 PM
The big money in the federal budget is in social entitlements, not defense. Defense stayed pretty steady at 30-34% of our budget through the entire Cold War, except during the Carter years, when it dipped to 27%. It is now down to 20% of the budget. Compare that with social spending, which was 17% of the budget at the beginning of the Cold War, and is now soaring towards 60% of the budget. Add to that the service on the national debt, which is now approaching 15% of the budget. Trying to further gut the military is not going even come close to paying the bill.

leistb
12-15-2008, 07:39 PM
I fail to see the relevance of the ratio of government spending on defense divided by the total GDP of the country. (3% to 4% )

Whereas in your first sentence you do acknowledge correctly the relationship of government spending is to the taxes that support that spending.

Suffice it say that the US governments 2009 spending for Military and non military national defense and security will be greater than all the personal income taxes collected by IRS for 2009.
(more than 100%)
(source 2009 presidents budget)

The relevance is trying to link defense spending to our overall financial woes. It's a favorite, although tired, ploy of the left. When money is spent on defense it doesn't just disappear into some grand void. While there has been documented waste in defense spending there has been a far greater contribution to the nation's bottom line in terms of actually employing individuals and realizing technological benefits that filter to the rest of society as a result of those expenditures (think GPS for one small example). The same can't be argued as effectively as the myriad entitlement programs we pour money into everyday. The net effect of most of those is it manages to keep people down and dependent on a government as their mother, father and everyday caretaker from cradle to grave.

Renegade
12-15-2008, 09:06 PM
good post, dharma. thanks.

rryan
12-15-2008, 11:21 PM
Don't tax you, don't tax me! Tax that fellow behind the tree!

Taxes fund Government spending. Perhaps if Defence spending was lowered to something like the world average, taxes would be a lot lower.

If the US reduced defense spending to the world average the rest of the world would be screaming bloody murder in 2 years tops.

usda
12-15-2008, 11:38 PM
The big money in the federal budget is in social entitlements06

I sincerely hope, when your turn comes around to apply for your 'entitlements'...you don't get them or just refuse them for the sake of philosophy...sorry, but it's liable to be the case any way you look at it.

:kinky:

Ought Six
12-15-2008, 11:48 PM
Since they have stolen my money for years, I will of course endeavor to get as much back as I can. That being said, if I could push a button right this moment that would kill social security and lay it to rest forever, even at the loss of every dime I have been taxed for it, I would push that button in a heartbeat.

theoryman
12-16-2008, 04:03 AM
We need that button!

Fiddlerdave
12-16-2008, 04:51 AM
The relevance is trying to link defense spending to our overall financial woes. It's a favorite, although tired, ploy of the left. When money is spent on defense it doesn't just disappear into some grand void. While there has been documented waste in defense spending there has been a far greater contribution to the nation's bottom line in terms of actually employing individuals and realizing technological benefits that filter to the rest of society as a result of those expenditures (think GPS for one small example). Well, except for the larger and larger parts of the defense spending and profits created that are getting outsourced to other countries and non-citizens.

Further, I find it quite interesting to be told we are the highest tax country, yet we can't afford a basic single payer healthcare plan (with optional add-on available for people who wish them), long term unemployment and many other benefits.

Could it be there is some inefficiencies to our system? Or major diversions of funds to special interests? Social Security is a poor second to many other systems who appear to tax less. Having basic healthcare for everyone appears to have enormous savings. Another mystery to ponder from conservative economics. :re:

leistb
12-16-2008, 01:58 PM
Well, except for the larger and larger parts of the defense spending and profits created that are getting outsourced to other countries and non-citizens.

Further, I find it quite interesting to be told we are the highest tax country, yet we can't afford a basic single payer healthcare plan (with optional add-on available for people who wish them), long term unemployment and many other benefits.

Could it be there is some inefficiencies to our system? Or major diversions of funds to special interests? Social Security is a poor second to many other systems who appear to tax less. Having basic healthcare for everyone appears to have enormous savings. Another mystery to ponder from conservative economics. :re:

Fundamentally, I agree with your statements and I think you've hit the nail on the head with regards to the inefficiencies of the monies as they are currently distributed. As I've mentioned before, a system-wide overhaul of lobbyist's influence, tort reform and further palm-greasing is definitely in order.

As far as a single payer health plan goes, I do think that lends itself to abuse on a greater scale than we currently have with the existing system. Without some skin in the game by the recipient I think you'd have all sorts of hypochondriacs coming out of the woodwork with a new ailment every time they saw a drug commercial being run on the television.

If, as a nation, we were to remove some of the problems that have contributed to the exorbitant health care costs (capping awards on malpractice suits, reduce the insurance company's role in determining what is good medicine -leave that to the doctors, arrive at a more realistic and cost-effective means with which to approve new drugs coming onto the market and shoot all the drug company lobbyists) I think we could drive the overall costs of providing health care down to realistic levels in line with the models of some other nations (India for example). Once the costs are down to realistic levels, then you could charge patients for services based on a sliding scale relative to their income and subsidize the rest.

What are your thoughts?

noeyedeer
12-19-2008, 01:51 AM
Of course none of this has to do with the US having one of the highest corporate tax rates and a Democratically-controlled congress (as of late) that won't lower those rates. Clearly, it must entirely be the fault of Bush.


This is always one of the biggest lies continually quoted - the high corporate tax rate. It would be true if it was ever collected.

Look at the federal taxes actually paid by by CSX Transportation for the years prior to John Snow becoming Treasury Secretary.

$0

http://www.ctj.org/html/jwsnow.htm

The list can go on and on.

Ben Franklin
12-19-2008, 02:37 AM
Everyone needs at least basic health care, that's one of the primary ways to decrease human suffering. We DON'T need to spend vast amounts of taxpayer money on policing an ungrateful world and sending off our children to Iraq to die for Halliburton.

I doubt we need more defensive capability than, say, Russia has. We could fend off military attacks with less than a third of the money that currently disappears into the military-industrial complex, tax money that is used for corporate welfare.

leistb
12-19-2008, 12:02 PM
This is always one of the biggest lies continually quoted - the high corporate tax rate. It would be true if it was ever collected.

Look at the federal taxes actually paid by by CSX Transportation for the years prior to John Snow becoming Treasury Secretary.

$0

http://www.ctj.org/html/jwsnow.htm

The list can go on and on.

In the spirit of playing devil's advocate, do you not take advantage of tax write-offs, exemptions or other means of avoiding paying into the government coffers? If so, why shouldn't corporations take advantage of this as well? If you answered yes to the first question then you would be applying a double standard. Personally, I take advantage of every write-off and exemption I can get, as an individual and as a business owner.

My personal feelings would be much different if there was less opaqueness as to where the money was being spent -but this would shine a glaring spotlight on the fact that much of it is wasteful spending. Until there is more transparency I'm not swallowing, completely, the notion of paying taxes should somehow be my patriotic duty.

I don't have a problem with limited social spending providing it isn't an endless 'safety net' that doesn't do anything to empower individuals to get away from the government's (tax payer) handouts. But to somehow point the gun at corporations and label them as evil for avoiding taxes runs the risk of being hypocritical -especially when they are providing jobs, which fund the tax base in the first place.

noeyedeer
01-17-2009, 06:56 PM
So, to once and for all end the mustard seed fallacy that US corporate income taxes are too high:

According to the Internal Revenue Service, more than 27 million businesses, including farm businesses, filed tax returns in 2000. Of these businesses, only 2.2 million — or about 8 percent — were subject to the corporate income tax.
Corporate income tax revenues are lower in the United States than in most European countries. According to data from the Organization for Economic Cooperation and Development, total federal and state corporate income tax revenues in the United States in 2000, measured as a share of the economy, were about one-quarter less than the average for other OECD member countries. Thirty-five years ago, the opposite was true — corporations in the United States bore a heavier burden than their European counterparts.

For instance, a study by the Institute on Taxation and Economic Policy used the annual reports of 250 major corporations between 1996 and 1998 to examine both these corporations’ incomes and their tax payments. These annual reports typically include the income that companies shelter from the tax authorities but include in their reports to shareholders. The study found that of these 250 large corporations — which together pay about 30 percent of all corporate income tax in the United States — one in six paid no corporate income tax whatsoever in at least one of these years.


Figure 4 presents data from the Organization of Economic Cooperation and Development on corporate income tax revenues as a share of the economies for 29 OECD countries in 2000. Based on these data, nearly three-quarters of these OECD countries collect more in corporate revenues relative to the size of their economies than the United States; only seven countries — Iceland, Germany, Austria, Hungary, Turkey, Poland, and Denmark — collect less than the United States

http://www.cbpp.org/10-16-03tax.htm

noeyedeer
01-17-2009, 07:15 PM
One more with more current data: http://seekingalpha.com/article/100089-high-u-s-corporate-taxes-are-a-myth

Potemkin
01-17-2009, 09:22 PM
Don't tax you, don't tax me! Tax that fellow behind the tree!

Taxes fund Government spending. Perhaps if Defence spending was lowered to something like the world average, taxes would be a lot lower.



According to the United States Constitution.

Section 7. All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

....

Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;....


So, Budget, Taxation, and Funding Bills (including defense Bills) originate in Congress and Taxation Bills originate in the House of Representatives.

Now, who has controlled the Senate since 2004 and the House since 2006?

Ought Six
01-17-2009, 10:30 PM
So look for the money only in the 20% of the budget spent on defense, never in the other 80%. Great plan. That will save us for sure. :re:

Fiddlerdave
01-18-2009, 04:20 AM
So look for the money only in the 20% of the budget spent on defense, never in the other 80%. Great plan. That will save us for sure. :re:Well, if you find money to cut from defense waste, it would be an immediate savings.

If you ended Social Security, you'd have to end the Social Security taxes, which would immediately reduce cash income more than outgo.

Ought Six
01-21-2009, 11:05 PM
The amount that could be saved from gutting the miltiary would be a pittance compared to the scope of the problem. That is a non-solution.

I would be all in favor of selling some of the 650,000,000 acres (that is over one million square miles) of federal land the American public owns in order to pay back, with reasonable interest, everything that Americans have paid into social security.