John Kerry: Tax Cutter?

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Kerry's plan to encourage companies to do business in the U.S. apparently includes a reduction in the corporate tax rate. Maybe there is a silver lining to this "exporting America" bollocks.

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  1. I find it hard to believe the Dem faithful will back this measure. They believe that rich people in general don’t pay taxes. Corporations, of course, are even worse than people, because they control the world by selling shoes and coffee, and that corporations pay 0 tax is a given.

    The Nader set will hate this idea.

  2. “I’m sure there must be a stick at the other end of the carrot.
    There always is.”

    The reason for the cut is to get rid of a tax structure which encourages companies to invest profits offshore instead of in the US. (As confirmed in the Wall Street Journal recently).

    If a company earns profits overseas, and invests them overseas without bringing them into US accounts, the current tax system allows the company to not pay US tax on those profits. The company only pays taxes in the foreign country, which are often lower than the tax rate in the US.

    So companies have incentive to take their profits earned offshore and invest in offshore factories and equipment, rather than using the profits to invest in such facilities in the US.

    (The technical term for such profits is “unrepatriated earnings”)

    Kerry would get rid of that provision of the tax code, so companies would be taxed on overseas profits.

    Note that the companies can write off the foreign taxes paid on overseas profits, so they wouldn’t be paying the US taxes on top of the foreign taxes.

  3. If they spend the money overseas, that means more money in the hands of potential consumers of U.S. products. We still export lots of stuff. Ask any foreign xenophobe who wrings his hands over our “cultural imperialism.”

  4. nobody: so let me get this straight: as a general proposition, you’re in favor of u.s. companies investing money overseas, employing foreign labor, and paying other, non-u.s. governments’ taxes, because by doing so they fund and/or subsidize purchases of u.s.-made exports by foreign consumers?

  5. nobody writes: “If they spend the money overseas, that means more money in the hands of potential consumers of U.S. products.”

    Hey, people in the US are also potential consumers of U.S. products. Unless they can’t afford to. Because they can’t find work.

  6. Of course, he also claims that these tax cuts won’t make the deficit any larger. Which begs the question: where is the money going to come from John? Or what are you going to cut?

  7. But if companies have an incentive to invest their profits offshore, then absent such a provision, they would have an incentive to spin off their foreign subsidiaries into independent companies that also wouldn’t have to pay US taxes.

  8. I find it hard to believe the Dem faithful will back this measure.

    Oh, they will, because they know it’s about as real as Bill Clinton’s pre-election “middle-class tax cut.”

  9. The proposed measure secures a small reduction at the expense of US-headquartered multi-nationals, who are already handicapped by being taxed on foreign earnings spent abroad, something few other developed nations do. It makes the tax code more complicated by requiring companies to differentiate between different sorts of spending done abroad, and it caters to anti-globalisation sentiment. It may well also have the perverse effect, for those worried about “shipping US jobs overseas”, of causing companies to ship their headquarters elsewhere in order to protect their companies from the new tax. All in all, I can’t see much reason to be happy about it.

  10. The central features are a lower corporate tax rate and the removal of tax breaks on companies who operate overseas. The so-called loophole at stake here is, itself, a form of ?reform?– which Kerry now threatens to repeal. Unlike almost any other major nation, the U.S. now taxes U.S.-based companies on their world income. Letting companies thus afflicted defer taxes on earnings overseas has been a way of lightening that unfair burden. Now Kerry proposes to put that burden back. The supposed offset? A lowering of the overall corporate tax rate. That means an arbitrary windfall to anyone who hasn?t been smart enough to defer all these years–and an asymmetrical punishment to those who were smart enough. In fact, those smart people will probably just solve the problem by leaving the U.S. entirely and setting up shop in a country that doesn?t burden its productive corporations as heavily as the United States.

  11. This Kerry marvel of an economic plan will simply result in some companies leaving the US altogether. Kerry-nomics simply runs corporations off.

    This is a trojan horse…Kerry trying to wrap a repeal of a tax cut as a tax cut itself.

    Of course, Kerry also doesn’t say where he will get all of the other money to pay for his big spending programs and balance the budget as he promises. Even he admits this would only raise about 12 billion dollars, and his proposed new spending alone amounts to over one trillion dollars.

    So, John Kerry, where will you get the money? The only place he can get that much money is not from the so called rich but from the middle class.

    Kerry is the most liberal senator in the US…no one should trust him when he attempts to sugarcoat his left wing agenda. He knows his liberal ideas will never sell, and so he has to try to cover it up.

  12. In Kerry’s ad, he says that x million jobs have gone to China since Bush reached office…doesn’t anyone else think that Kerry is race baiting? Afterall, his economics is poor to terrible, but this ad is implicitly racist…what if those jobs had gone to an African nation? Kerry will certainly lose the Asian vote if he keeps this up…maybe he’ll collapse into that black hole of race baiting and bring up the tech exodus to India.

  13. Such brilliance from Mr. Kerry. It’s too bad he hasn’t had access to some sort of deliberative, law-making body for the past twenty years or so, so that he could have advanced through it his masterful ideas for the benefit of society. I wonder what he was up to during that time?

  14. Of course, he also claims that these tax cuts won’t make the deficit any larger

    Because they won’t really be tax cuts. They will be tax code *changes*, but the net effect must be a tax increase.

    If Kerry was truly cutting taxes, he wouldn’t need to eliminate the “loophole” of not taxing corporations on profits earned and invested overseas. Companies would *naturally* stop outsourcing, and would do business in the new, tax-friendly United States.

    What Kerry is actually doing is lowering the US tax rate, but dramatically increasing the pool of corporate income the United States government considers taxable. The net effect will be a tax increase.

    By the way, I *love* how the press is willingly buying into Kerry’s spin that it is a “loophole” that corporations don’t get taxed on money they neither earned nor spent within the United States.

  15. Kerry will BEGIN with 49? additional tax on gas
    to pay for alternative energy research.
    Who will that hurt the most?

  16. “In Kerry’s ad, he says that x million jobs have gone to China since Bush reached office…doesn’t anyone else think that Kerry is race baiting?”

    Aren’t you actually talking about the new “Media Fund” ad (not a Kerry ad) where they show a Chinese Factory (designated as such by the ‘exotic’ symbols dotting the building) and talk about Bush’s “record” of outsourcing jobs? Maybe Kerry has a similar ad, but in our media market, we just get the Media Fund version.

    Oh, and to answer your question regardless of who put out the ad, yes. It is a fairly ugly ad and tactic.

    By the way, why do those on the far left simulatneously want to bring back to the US those dirty factories from China AND shut them down through envioronmental regulation? Seems that the ELF and the like should heap praise upon industrial outsourcing…

  17. > Does anyone know what the current polling is? Is it looking like Kerry is going to win?

  18. Tax Cuts?

    Better bring yer lunch (and a sleeping bag) you might be waiting a while.

  19. No hammer behind the “silver lining”?

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  21. Or post passwords.

  22. I’m sure there must be a stick at the other end of the carrot.
    There always is.

  23. And we must never allow you to direct your own retirement fund, lest you realize that the taxes on those corporations are being paid by you, corporate shareholder and customer.

  24. Yesterday, driving home from work, I heard a soundbite from Mr. Kerry (on ABC top-of-the-hour news, I think): “we will make the federal government smaller.”

    Was I halluncinating? Is he actually making promises like that? Or is he simply talking about reducing the rate of growth? While I don’t actually expect him to make good on such promises, any more than GOP pols did after they spoke similar words to get elected in years past, he certainly did get my attention.

  25. I found Kerry’s economic speech from yesterday (3/26) at http://www.c-span.org. Look for his “make the federal government smaller” comment around 36:46 (I would start viewing at 36:40 or even somewhat earlier for context).

    Here is the realmedia URL:

    rtsp://video.c-span.org/project/c04/c04032604_kerry.rm

    The rest of his speech makes me wonder how he expects anyone to believe that he will make the federal government any smaller, given the initiatives he also claims to support in the same speech. But at least I wasn’t hearing things: he actually said the words. Sadly, this means that Libertarians aren’t the only ones promising to “make government smaller.” Now they have to run on the somewhat more dubious claim that they are the only ones who can or will deliver on that ambitious promise. Or they have to take the low road and simply call Mr. Kerry a liar.

  26. Please, James, let me be the first. John Kerry is a liar.

    That was fun, but I’m not sure how it helps my campaign. Maybe if I sing louder in the choir. George Bush is a liar.

    Fun, too. Now I’ll get the votes!

  27. >John F. Kerry today will propose cutting the corporate tax rate

  28. joe,

    I don’t know enough about Sweden to know why it’s such a bad example in this regard, but on the surface of it, I would say, Sure. If no individual has access to the corporate bank account for personal purposes, why tax it?

    The only reason I can think of to tax corporations is to offset the unfair advantage of limited liability.

  29. kwais,

    On the subject of general taxation, I tend not to think of taxes as a “cost” of goods and services per se. In reality, taxation is just a way of “coersively” appropriating purchasing power for the government or other positive externalities. Theoretically, people give money in taxation as a sacrifice of their “rights” to goods and services for some greater good,like building Dr. Seuss memorials or paying DuPont not to grow food or spraying Roundup on Colombia.

  30. “Here is why corporations should not pay taxes; They are comprised of people that already are supposed to pay taxes and they serve or cater to other people who pay taxes.”

    So the stockholders a company should have their share the corporation’s earnings added onto their wage and salary income when filing their taxes – even that amount that the company banked and didn’t pay out to the stockholders? Interesting – sounds like Sweden.

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