Obama's Daft Plan to Insource Jobs Back to America

The President threatened to take away the tax deductions of companies that move jobs and profits overseas in his State of the Union address last night. “It is time to stop rewarding businesses that ship job overseas,” he thundered.

But the truth is that not even Mitt Romney’s tax accountant could get him a tax write off for moving jobs to Bangalore. So what in the name of Warren Buffet’s secretary could Obama possibly mean?

After doing some poking around, this is the best I can come up with:

American companies operate at a significant tax disadvantage compared to their international peers for two reasons: One, they pay about a 40 percent corporate tax rate, the second highest in the world after Japan which is due to slash its rate this April.

Two: America is among the few countries that follow the so-called worldwide system of taxation that puts American companies on the hook to pay taxes twice on their overseas income— once in the country where it was generated and then in America.

The Center for Fiscal Accountability notes that although the worldwide approach was once popular, about two-thirds of Organization for Economic Co-operation and Development countries, joined recently even by Japan and United Kingdom, now use the single-taxation territorial system. Under this system, companies are required only to pay local taxes, not their home country’s taxes.

This means that right now the United States is the only country that subjects its companies to both a worldwide system of taxation and a corporate tax rate above 30 percent. To mitigate this double jeopardy somewhat, the ever-merciful Uncle Sam currently allows American companies to postpone paying taxes on their overseas income until they repatriate it to the United States instead of when they earn it, notes Curtis S. Dubay, a senior analyst at Heritage Foundation. This tax deferral is what President Obama calls a tax break. And he’s been trying to end it for a while now, including in the budget he submitted to Congress last year, Dubay points out.

In other words, President Obama’s plan to insource jobs back to America is to make American companies as globally uncompetitive as he possibly can.

It takes hard work to be this daft, but somehow the president manages quite well, thank you very much.

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  • Sandi||

    I took a shit in America once.

  • El Busherino||

    I took a shit on America once.

  • Colonel_Angus||

    I took a shit in the White House once. And didn't take care in aiming my piss.

  • Colonel_Angus||

    I took extra time putting toilet paper on the seat, because Clinton was in office. But I left the toilet paper sitting there when I was done.

  • Gojira||

    I don't even understand the justification for taxing profits in other countries. I'm not trying to be snarky, I honest-to-god don't understand the logic that would allow such a system to exist.

  • WTF||

    Because they can? Or rather:
    Fuck you, that's why.

  • sarcasmic||

    exactly

  • Gojira||

    Well sure, but I mean I can't even discern the fake logic behind it.

    For example, "We have to outlaw transfats because they make people fat and sick!"

    There's a stated reason for doing it, even if that reason is stupid bullshit. I don't even understand that fake bullshit reason for taxing people for something they do on the other side of the earth not using any of your public resources.

  • JD the elder||

    "Because they're Americans, and we tax Americans' income" is about as much of a reason as I can come up with. There's also the semi-related point that America is one of the only countries to impose an income tax on money that an individual earns outside the US, so if they didn't do it to corporations too, they'd be accused of the usual "huge giveaway to giant corporations that outsource US jobs".

    Of course, why the US collects income tax on individual income from outside the country is also an open question, but I think "Because fuck you, that's why" is about as close as you'll get.

  • ||

    But, Gojira, we are resources of the Total State. It is literally impossible for you to do anything without using the resources of the Total State.

    Be grateful that the Total State permits you to retain a mite or two of your earnings on Its behalf.

  • wareagle||

    goj,
    stop looking for logic with this bunch. It will only make your head hurt. The king said it and it is so, and he looked around and saw that it was good. Any more questions?

  • cynical||

    Because government thinks about the economy like Captain Planet villains think about the environment?

  • Anonymous Coward||

    Because you are property. You're the king's draft animal and he expects to be compensated for your use, no matter where you might be. If you should die, then he expects compensation equal to any potential incomes you might have reasonably earned him.

    See? Simple. Now all we have to do is deworm you, geld you, and brand you, and you're good to go!

  • Gojira||

    Hmm, so I get a free deworming out of this?

  • Xenocles||

    "There's money over there, and we want it."

  • WTF||

    It takes hard word to be this daft, but somehow the president manages quite well, thank you very much.

    It takes hard work too.

  • rst||

    Maybe it takes hard wood.

  • Almanian||

    You said "hard"!

    And then you said "wood"!

    huh huh, huh huh, huh huh, huh huh, huh huh....

  • cynical||

    I was thinking about saying that, but I figured it doesn't really count if it's intentional.

  • DMXRoid||

    I took this as a pretty clear sign that Obama wants to institute a functional labor tariff on US companies, especially when combined with his "Rawr outsourcing" rhetoric.

  • sarcasmic||

    Nothing stimulates the economy quite like making consumer goods more expensive so the average person buys less stuff.

  • My jewish accountant||

    "One, they pay about a 40 percent corporate tax rate, the second highest in the world after Japan which is due to slash its rate this April."
    _
    oy vey, no company pays this much. pass the lox...

  • Zeb||

    No, but it is the tax rate. And they have to do things like keep as much money as possible out of the country to avoid paying that much.

  • ||

    They are in a 35-40% tax bracket, but I think the average paid is probably closer to 15% than 40%. [Some pay zero, but that's not the norm.]
    If you cut that rate in half without also ending the tax shelters, they'd be paying nothing, or getting refunds.
    [Paying zero is okay, but I'd prefer they just get rid of the entire tax code and taxes.]

    I guess it could be accurately stated that we have a 40% tax rate that forces them to create tax shelters and deductions, and off shore their funds. So in that regard, it's still a cost of doing business the US is imposing.

  • Colonel_Angus||

    Fuck tax breaks. But also fuck business taxes. (all points assuming some form of taxation must exist)

  • robc||

    I dont know if what be a good idea or not, but I like the idea of making all corporations pass thru entities. It should at least be discussed.

    My broker sends me a tax sheet with my dividends for the year, can send me one for my share of company profits too.

  • Colonel_Angus||

    If you mean that all corporate profits only get taxed as income when it makes it to an individual investor, at the same flat percentage rate that everyone pays on all positive gross cash income (net profit on investments), that's the idea.

  • robc||

    No, I mean treat C corps like S corps.

    There is no corporate tax, but each individual pays on their share of the profit each year, whether the income makes it to the investor or is held.

    It eliminates double taxation while still getting the income taxed each year.

    I would prefer the income tax rate be zero, but until then, I think getting rid of the separate corporate tax/individual tax stupidities would be a good idea.

    And, of course, if the company you own pays foreign taxes, you would receive a credit for taxes paid.

  • Colonel_Angus||

    "each individual pays on their share of the profit each year, whether the income makes it to the investor or is held"

    That's unnecessarily complicated. And it stinks like property value taxes do- taking money that people don't have. Just tax all gross income when the person actually receives it.

    Also, the foreign tax credit idea is stupid. If you choose to invest in a company that gets foreign taxed, that's between you, the company, and the foreign country. It's not the government's fault that you gave your money away overseas.

  • Colonel_Angus||

    I assume that there will always be some form of taxation and my goal is one absolute flat rate income tax and/or consumption tax for efficiency and fairness. Beyond that, I do not intend to expend many resources attempting to achieve zero taxation. This does not mean that I will resist libertarian anarchy.

  • tarran||

    The problem for Obama is that people are declining to hurt themselves in order to make him look good.

    So now he is trying to figure out how to force them. And the stick has to be scarier than the stick they are trying to evade.

    He's on a path of increasing interventions - each one trying to paper over the problems caused by its predecessor - that will ultimately lead to a crisis of the sort Truman faced when his advisors suggested sending the National Guard on sweeps through farms to confiscate livestock that farmers were "hoarding". The question is will Obama blink like Truman? Or will he start shooting kulaks like Lenin?

    My guess is he'll blink. My junior-officer's-spider-sense detects a vibe of vacillation behind his narcissism.

  • cynical||

    Blink or not blink, it doesn't much matter. If he starts engaging in serious violence against Americans, there will be shooting in the other direction, mostly likely. The only question is whether the coup will be popular or military in nature.

  • ||

    To mitigate this double jeopardy somewhat, the ever-merciful Uncle Sam currently allows American companies to postpone paying taxes on their overseas income until they repatriate it to the United States instead of when they earn it

    And companies are sitting on billions waiting for the next repatriation holiday to bring those profits home. Of course Dear Leader could offer them a 50% discount on that tax to get them to bring that money back, but they'd rather spin fantasies about forcible repatriating the money so they can tax it and get nothing instead of Xbillions - 50%. Because soaking corporations is more important than paying down the debt or even wasting it on entitlement programs like they would anyway.

  • Gojira||

    You clearly hate black people.

  • ||

    Yep - Once the money leaves American shores it's never coming back. Companies will sit on it and re-invest abroad until there isn't a double-toll to bring it home.

    Meanwhile every executive will fantasize about pulling a Joe Kennedy and moving the whole operation offshore.

  • Rev. Blue Moon ||

    To play off of yesterday's Yokeltarian Nativist thread, maybe he can just build a big wall so corporations cannot leave. That'll do the trick.

  • Gojira||

    I completely endorse this plan. The wall can keep brown people out, and evil outsourcing corps in. This should garner full bipartisan support.

  • o3||

    but we want the yellow peeps...and the purple ones too

  • o3||

    cuz i'm a purple peter eater

  • Zeb||

    Wouldn't you have to build a dome or something? I hear those guys have airplanes.

  • Anonymous Coward||

    What if they build a trebuchet?

  • northern exposure||

    god l luv when those hurl dead bodies out into the lake!

  • ||

    I always thought when politicians talked about "Tax breaks for shipping jobs overseas", that they meant the deductions for business expenses that were involved with the off-shoring, or the actual expenses of the offshore operation.

  • ||

    I always assumed that they were making shit up - and I was right.

  • Fluffy||

    OK here's what I don't get.

    If they "close the loophole", doesn't that create a massive incentive to plain old not be a US company any more?

    Basically we'd be saying:

    "GM, you have to pay US tax on what you make in both the US and what you make in Japan. Toyota, you have to pay US tax only on what you make in the US."

    Wouldn't this incent GM to say, "Our new name is Kinichiwa Industries, and our new HQ is in Osaka."

  • BakedPenguin||

    GM is a bad example. Even the Japanese are smart enough not to bail them out.

  • BakedPenguin||

    - and the fact that they will inevitably need a bailout is reason enough not to leave.

  • o3||

    the japs darn sure bailed out fukushima

  • cynical||

    Yes, which was not smart. But even as not-smart as that was, they're still smart enough not to bail out GM.

    DO YOU SEE?

  • o3||

    all i can see is teh inside of my ass

  • Zeb||

    Aren't a lot of essentially American companies already incorporated in the Cayman Islands and places like that for that very reason?

  • ||

    Yep - Bermuda is a popular place too.

    This is hardly a new development. Long ago Joseph Kennedy moved his oil companies from Mississippi and Alabama to Fiji. The majority of the Kennedy fortune followed. They pay next to nothing in inheritance taxes because their corporations and most of their money is abroad.

  • Old Mexican||

    It takes hard work to be this daft, but somehow the president manages quite well, thank you very much.


    Or more likely, the president has NO clue, NO hint, NO idea of what he's talking about. Neither does his speech writer, or the guy that advises him.

  • o3||

    that cant be true OM since obama is a muslim terrorist...and they have that caliphate/shria law master plan

  • Almanian||

    Shorter Urine: "derp"

    usual thanks for your special stupidity, etc. etc. etc.

  • Almanian||

    I just wanted to commend Ms. Dalmia on her exquisite use of the word "daft", which is not used nearly enough in general conversation.

    Thank you, Ms. Dalmia!

  • ||

  • o3||

    and almanian is the perfect person to use daft fo shure

  • Fatty Bolger||

    It struck me earlier that most of Obama's economic pitch could be summed up as "we had to destroy the economy in order to save it."

  • adam||

    He's been repeating that line about tax breaks for companies that send jobs overseas for years now. Every time I hear it, I think, is there really some corporate tax break when you hire a foreigner to replace an American? I mean, Congress is dumb, but they certainly wouldn't pass that right? I've never seen him actually explain what the hell he means, so I assumed he was full of it.

  • robert||

    I know there is a logical break down here somewhere, there may be some standard game theory for this.

    Let the President institute whatever tax plan he/she wants and the only people who have to pay it are those who voted for him and those who didn't vote.

    consider

  • smartass||

    Fuck it. We need to outsource the POTUS. We don't seem to have anyone competent enough to fill the role anymore.

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