I know I link to a lot of pieces by my colleagues at RedState, but this from Skanderbeg (who knows his stuff because he does a lot of business abroad) is really a concise masterpiece explaining the lunacy of Obama’s latest plan to jack up taxes on already-battered American businesses. A sample of his explanation of the existing anti-business rules that Obama wants to make worse:
Suppose you are CEO of XYZ Widgets, Inc., an international widget supplier based in the U.S. You have a competitor, ABC Widgets Oy, based in Finland. Both of you sell widgets in the U.S., earn profits, and pay U.S. corporate tax on those profits. Both of you sell widgets in Finland, earn profits, and pay Finnish corporate tax on those profits. So far, so good. However, here things diverge. ABC Widgets Oy can take its remaining after-tax profits from the U.S. and bring them back to home base in Finland to invest in things like increasing widget production – and not face another hit of Finnish corporate tax on that money. In contrast, if you (XYZ Widgets, Inc.) want to repatriate your after-tax profits from Finland back to the U.S. – to invest in things like increasing YOUR production of widgets…well, you have to pay the full (and also too-high) U.S. corporate tax of 35% on those already-taxed-in-Finland profits. You’d probably choose to leave that money outside the U.S. – and, oh, use if for something like investing in increasing your widget production by building a new plant in someplace like Romania.
In the above, replace “Finland” with the name of any other country in the world, and the story is the same. The U.S. is the only country that has this “double-taxation” rule.
There are three possibilities. One, Obama really is this economically ignorant. Two, Obama knows the consequences of his actions and genuinely desires to reduce the presence of large corporations in the U.S. and replace them with government employment. Three, Obama is cynically pandering to his economically ignorant base and, perhaps, hoping that somehow his plan will end up getting scuttled.