Administration’s Tax Plans Raises High-Tech Hackles

[HardOCP News]

So this new plan to impose taxes on corporate America's overseas profits has the tech sector a little worried, do you guys think this will help or hurt?

If Obama's proposal becomes law, the hard-hit companies would include tech bellwethers like Hewlett-Packard Co., IBM Corp., Cisco Systems Inc., Microsoft Corp. and Google Inc. Each of those companies realized a benefit of more than $1 billion from lower foreign tax rates in their most recent fiscal years -- an advantage that could lost if Obama is able to change the rules.

 

[oROEchimaru]

going after tax evasion (island banks, swiss banks etc) good.
going after US companies who are owned by fake us companies on island countries: good

taxing companies that outsource IT... well that doesnt make much sense lol... why not tax everyone that has companies in multiple countries? its a little "hey this makese no sense"

and i work at a US helpdesk

 

[morkboy_wonder]

going after tax evasion (island banks, swiss banks etc) good.
going after US companies who are owned by fake us companies on island countries: good

taxing companies that outsource IT... well that doesnt make much sense lol... why not tax everyone that has companies in multiple countries? its a little "hey this makese no sense"

and i work at a US helpdesk

I agree these proposals probably didn't have tech companies in mind when they were made but these tax loopholes need to be snuffed out.

 

[singe_101]

They made enough income to save over $1B in tax difference? It sounds like they were in pretty good shape.

If they benefit from the U.S. economy and domestic infrastructure, they should pay the taxes.

 

[Azhar]

I say tax the shit out of companies that outsource our companies. They think to take jobs away from us and employ Indians or Malaysians for a buck an hour to save money, think again.

I have no problems with outsourcing itself. I only have problems with it when companies do it at the expense of American employment and hoarding profits when they can full well afford to pay Americans.

 

[k1pp3r]

This seems like the administrator wants to tax ALL overseas business for US based Companies. Which could severly impact the US causing companies to move out of the country all together.

This also seems like it would punish companies like Huntz that needs to manufacture their products close to the distribution points for quality reasons.

Bad idea IMO

 

[Nemesis999]

Liberals are so stupid.

Outsourcing is the ALTERNATIVE to just moving to another country. All this will do is drive capital out of the country and reduce tax revenue.

 

[Nemesis999]

They made enough income to save over $1B in tax difference? It sounds like they were in pretty good shape.

If they benefit from the U.S. economy and domestic infrastructure, they should pay the taxes.

So tell me, what part of starting and operating another branch of your company in another country is "benefiting for U.S. economy and domestic infrastructure"?

 

[Katalysis]

They should crackdown on tax sheltering, tax loopholes, hedge fund management payment (who manage to pay 15% income tax on their multi-million dollar salary), etc. They are just trying to avoid paying their share.

This really isn't an outsourcing issue. It's more of one about powerful corporations who have the power to make the laws, then having them made so only they can exploit them.

 

[mstersmith1]

Hmm I think the 39% they pay is plenty. If I was them I would hide as much as I could from this administration. Hell I would lay an ass load of US workers off as soon as this goes through and then blame Obama. Let him put that in his pipe and smoke it.

 

[Ockie]

The US is one of the few countries that double tax its citizens from working overseas... the average American pay twice in taxes local and foreign when working as expat or day rate.... however, the average American company does not have to be taxed for using foreign labor.

This is a double tax standard that has left the corporate world running amok tax free and has nailed the average hard working citizen.

I say it's about damn time. These companies made billions taking our jobs away and enjoying our benifits, yet when we have to go outside to find a job, we pay twice.

 

[supaspoon]

So tell me, what part of starting and operating another branch of your company in another country is "benefiting for U.S. economy and domestic infrastructure"?

You replaced FROM w/ FOR, which changes the statement quite a bit. In it's original form, I don't see much need for an explanation of what he meant.

 

[dr.stevil]

Outsourcing is the ALTERNATIVE to just moving to another country. All this will do is drive capital out of the country and reduce tax revenue.

I have to agree a little... it's not helping anything. My county is a perfect example... they taxed the local businesses to death which ultimatly forced them to shut down and/or open up shop where it was cheaper (out of NY state for the most part) and taking all the jobs with them.

It will happen on a national level if the burden becomes to big for them. They're not here to provide jobs (although it's a nice benefit), they're here to make money

 

[PTNL]

Outsourcing is the ALTERNATIVE to just moving to another country. All this will do is drive capital out of the country and reduce tax revenue.

You're talking a world of difference for transplanting any company that is the size of those that were mentioned. That mindset fails from so many perspectives: relocation logistics, base-level employee staffing (including ramp-up and process training for new workers), HR and administration staffing (either through moving or hiring new), complete change in legal staff to meet the needs of the destination country, the willingness of the owners to leave a country.

If you want a smaller scale of tax evasion leading to relocation/expatriation and the level of impact it has, strike up a conversation with Wesley Snipes about his "extended vacation"

 

[Zellio2009]

They're not here to provide jobs (although it's a nice benefit), they're here to make money

Corporations are here to make money and provide a service to the community.

They ARE HERE TO CREATE JOBS.

 

[Monkey God]

Corporations are here to make money and provide a service to the community.

They ARE HERE TO CREATE JOBS.

You are so incredibly wrong, and it blows my mind anyone can actually believe this.

 

[Nemesis999]

You replaced FROM w/ FOR, which changes the statement quite a bit. In it's original form, I don't see much need for an explanation of what he meant.

No I didn't.

If a business is running a branch in a foreign country they are not using US infrastructure. Why the hell should they pay US taxes?

You're talking a world of difference for transplanting any company that is the size of those that were mentioned. That mindset fails from so many perspectives: relocation logistics, base-level employee staffing (including ramp-up and process training for new workers), HR and administration staffing (either through moving or hiring new), complete change in legal staff to meet the needs of the destination country, the willingness of the owners to leave a country.

Who said anything about transplanting any businesses? While this would undoubtably happen, it's not what I said at all. You act as if all these businesses didn't have major offices in other nations. They do. There is very little stopping many of them from changing their headquarters to another country. Even if the switchover costs $100M, they still have huge savings in the long run.

Capital on the other hand is just assets, which will be used to start and run other businesses in other countries as a result of taxes getting jacked up in the US.

Conservatives are so stupid.

They don't even read the articles before writing a comment about it.

This isn't about outsourcing, it's about foreign customers and sliding money around in different countries so you evade taxes.

It just doesn't work for the tech industry, because the internet has no borders.

But we do need to prevent outsourcing in the tech industry.

I love how you make this comment without reading the article, or worse, without even coming close to comprehending what is being taxed. Outsourcing is the wrong word, but it doesn't make you any less wrong.

This is not just some company shifting profits to a foreign branch. If that is all it was then there would be no problem as they could neither use nor repatriate the money and still avoid taxes.

If HP starts HP-China to serve Chinese customers, in China, with Chinese staff, and Chinses suppliers, then why the HELL should they pay US taxes? That isn't tax, that is theft. These businesses are ALREADY starting foreign branches because the US tax rates are too high, why the hell would anyone in their right mind think the solution is to crank out more taxes? All that will happen is that the people with all the money will instead start thier business in China and open a US branch to (ironicly) avoid the commie bullshit of the current tyrant.

 

[Nemesis999]

You are so incredibly wrong, and it blows my mind anyone can actually believe this.

AGHHHH MOTHERLAND! THE CORPORATIONS SHALL SERVE THE PEOPLE COMRADE!

 

[BloodyIron]

It's about time execs earn sane ammounts of money. Bring on the taxation!

 

[supaspoon]

Corporations are here to make money and provide a service to the community.

They ARE HERE TO CREATE JOBS.

Um, sorry but that first statement is cyclic. Why do the provide a service to a community? Umm, yeah, to make money.

What make you think a company has an obligation to serve you? If serving you doesn't make them money....guess what, yeah, they're gone. Creating jobs is a bi-product of making money, the making money part is the first priority, the other way around (the one you're suggesting) is unsustainable.

 

[provoko]

Taxes help change behavior. If you want small business to succeed, you tax them lower than the mega corporations. If you want more jobs created inside the US, then you tax overseas more.

Besides, if you want cheap overseas labor, you should be able to afford the higher taxes.

Do me a favor megacorperations and STFU!

 

[supaspoon]

No I didn't.
If a business is running a branch in a foreign country they are not using US infrastructure. Why the hell should they pay US taxes?

He also said 'economy', and yes you did. Read it again, perhaps your "z0mgL1b34rls!" cap is making you read what you want to, but he said FROM, not FOR. Learn to read, mmmkay.

 

[Nemesis999]

He also said 'economy', and yes you did. Read it again, perhaps your "z0mgL1b34rls!" cap is making you read what you want to, but he said FROM, not FOR. Learn to read, mmmkay.

It's called a typo, I like how you have decided to attack the typo while ignoring the fact that the originial statment is still blatantly incorrect.

I would like you to detail to me how a business operating in a foreign country, with foreign suppliers, foreign labor, and foreign customers, is benefiting from the US economy or infrastructure.

Clear now?

 

[supaspoon]

It's called a typo, I like how you have decided to attack the typo while ignoring the fact that the originial statment is still blatantly incorrect.

I would like you to detail to me how a business operating in a foreign country, with foreign suppliers, foreign labor, and foreign customers, is benefiting from the US economy or infrastructure.

Clear now?

Crystal. I wouldn't have even bothered if the 'typo' didn't totally change the meaning of the sentence.

Anyway, I could answer your question quite simply if you did not introduce a new variable, which is foreign customers. What makes you think he was assuming these companies would not so much as sell any products in the us? I must have missed this part. In the circumstance you've outlined, I don't think anyone here would disagree with you. But tbh you're the only one who's outlined it as such, and saying others have and then calling them retards for it is quite douchebaggery of you.

So in your mind, you think he was saying we should just run around the world trying to tax companies that have absolutely ZERO interaction with the US at all? No wonder you think he's stupid. But your rather large, retarded assumption is incorrect I'm afraid.

Anyway, if you remove that assumption, it's quite simple, it's called tariffs.

 

[PTNL]

Who said anything about transplanting any businesses? While this would undoubtably happen, it's not what I said at all. You act as if all these businesses didn't have major offices in other nations. They do. There is very little stopping many of them from changing their headquarters to another country.

Actually.. you did say that. You stated that outsourcing (or, to be more accurate given the original article, "off-shoring") was the alternative to moving. Relocation was an alternative of your justification to off-shoring, and acted as a counter-point support for your stance. I'm not going to debate between your intention versus what you wrote; wordsmithing mistakes can happen.

Even if the switchover costs $100M, they still have huge savings in the long run.

Throwing out a random dollar value and justifying it with "have huge savings in the long run" does nothing to support your argument.

 

[Katalysis]

It's called a typo, I like how you have decided to attack the typo while ignoring the fact that the originial statment is still blatantly incorrect.

I would like you to detail to me how a business operating in a foreign country, with foreign suppliers, foreign labor, and foreign customers, is benefiting from the US economy or infrastructure.

Clear now?

Is that question a joke? You cannot think of any situation? Well, let's see. How about the technology that is developed in the workshops and labs in our American universities, which are supported by American tax dollars, which is then used by a corporation to create or perfect a product, which then ships the entire operation to a foreign country for the construction of the device in order to avoid paying any American taxes? Yeah, that's hard to believe, considering it happens with every single piece of technology ever.

 

[Nemesis999]

Anyway, I could answer your question quite simply if you did not introduce a new variable, which is foreign customers. What makes you think he was assuming these companies would not so much as sell any products in the us? I must have missed this part. In the circumstance you've outlined, I don't think anyone here would disagree with you.

Because that is what this tax is all about? HP and Google and IBM and Microsoft and all these other businesses targetted with this tax have US offices that serve US (and many foreign) customers. Google China does not serve the US, yet they want to tax it. HP Germany isn't pumping out German language systems to serve the German-American population, they're serving the people of Germany. If those systems were brought into the US and sold then tehy would already be subject to US tax laws.

A portion of that profit gets sent back to HP-US (i.e. repatriated) and taxed, the rest is taxed under German law and reinvested in their German operations.

This is all about taxing that profit from German customers on the absurd claim that the US somehow "deserves" that money for no other reason then HP declares their home office to be in the US.

So in your mind, you think he was saying we should just run around the world trying to tax companies that have absolutely ZERO interaction with the US at all? No wonder you think he's stupid. But your rather large, retarded assumption is incorrect I'm afraid.

No, it's about taxing foreign operations of US businesses despite the fact that these are simply businesses operating in foreign country serving their foreign customers. This is literally an attempt to tax the citizens of other countries.

The reality is that these businesses WANT to take this money from their foreign branches but won't because of already excessive taxes on attempts to repatriate these profits. This problem exists because of taxes, not in spite of it. More taxes do not solve the problem, it just makes it more profitable to simply operate out of another country,, or simply start businesses in other countries to start with.

 

[Zellio2009]

Um, sorry but that first statement is cyclic. Why do the provide a service to a community? Umm, yeah, to make money.

What make you think a company has an obligation to serve you? If serving you doesn't make them money....guess what, yeah, they're gone. Creating jobs is a bi-product of making money, the making money part is the first priority, the other way around (the one you're suggesting) is unsustainable.

That's funny. Because I'm currently going back to school on a managing degree at Devry, and that's also what my instructors say.

Without qualified workers, you also have no job structure either. But I guess too many idiots have forgotten what businesses are supposed to be like and only see $$$ signs.

 

[Zellio2009]

And btw, considering we import too much, and don't keep American jobs in our country, it should be obvious why we are in a recession.

You answered your own question with your own stupidity. By not keeping jobs in America, we make America itself unprofitable.

 

[Zellio2009]

Because, otherwise, all you have is other nations having jobs while Americans don't. Or is this too much common sense for you supaspoon?

 

[Katalysis]

That's funny. Because I'm currently going back to school on a managing degree at Devry, and that's also what my instructors say.

Without qualified workers, you also have no job structure either. But I guess too many idiots have forgotten what businesses are supposed to be like and only see $$$ signs.

My sister works for a major American heavy equipment manufacturer, and has visited their plants in Latin America, where the unqualified workers have yet to create a shippable product in a number of years. Their failure rate and yield of workable product is awful. It turns out that uneducated, unskilled, illiterate-in-English workers cannot build advanced machinery designed in English.

 

[Zellio2009]

My sister works for a major American heavy equipment manufacturer, and has visited their plants in Latin America, where the unqualified workers have yet to create a shippable product in a number of years. Their failure rate and yield of workable product is awful. It turns out that uneducated, unskilled, illiterate-in-English workers cannot build advanced machinery designed in English.

Thats the point. Idiots like Supaspoon want to say profits are the only important thing in a business, yet all this outsourcing has done is send us in a worldwide recession without qualified workers.

 

[Nemesis999]

Actually.. you did say that. You stated that outsourcing (or, to be more accurate given the original article, "off-shoring") was the alternative to moving. Relocation was an alternative of your justification to off-shoring, and acted as a counter-point support for your stance. I'm not going to debate between your intention versus what you wrote; wordsmithing mistakes can happen.

moving head-office operations != transplanting your businesses, these foreign offices already exists.

Capital always flows to the most profitable locations. This principle is what made the US the wealthiest nation on Earth, and is what will soon cause China to replace the US.

Higher taxes = lower profits = lower capital investment. The more you jack up taxes the more capital that will leave for greener pastures. Taxes are about greed. Americans spent hundreds of years building up this wealth over time, now the commies want to take it all and just pretend the system will continue to operate.

Throwing out a random dollar value and justifying it with "have huge savings in the long run" does nothing to support your argument.

Oh, I'm sorry, when I said "EVEN IF" I didn't think you would would interprete that as "IT WILL COST EXACTLY THIS MUCH MONEY".

Considering the amount of money they're attempting to steal is in the billions, then yes EVEN IF it cost $100M to move operations they would still see huge increases in net profits in the long run. (Millions are less then Billions)

Yeah, that's hard to believe, considering it happens with every single piece of technology ever.

AHAHAHAHAHAHAHAH. Idiot. Every single one of these companies pays MORE in taxes then they have ever received from the government directly or indirectly.

Because, otherwise, all you have is other nations having jobs while Americans don't. Or is this too much common sense for you supaspoon?

And your ingenius solution is to tax these people (who have precisely NOTHING forcing them to stay in the US and pay US taxes) and just hope they decide to keep paying, huh? You're a smart one, I can see why DeVry took you.

 

[oROEchimaru]

meanwhile we are still pro -sweatshops as long as they pay us taxes...

 

[supaspoon]

Thats the point. Idiots like Supaspoon want to say profits are the only important thing in a business, yet all this outsourcing has done is send us in a worldwide recession without qualified workers.

Excuse me, but no where did I say that. Profits are not the only important thing in business, but they are the most important thing in business. Without profit, business, and everything that comes with it, ceases to exist. Sure, governments use taxes to try to 'encourage' business to operate in one fashion or another. But the bottom line is no profit = no business = no jobs.

If you're unable to comprehend that, well sorry, but there's not much point conversing w/ you about it.

 

[Katalysis]

AHAHAHAHAHAHAHAH. Idiot. Every single one of these companies pays MORE in taxes then they have ever received from the government directly or indirectly.

Somehow I bet every single one of these companies would call development of Mosaic at the NCSA at the University of Illinois, which pretty much lead to the commercial success of the entire fucking internet, as a positive. That's just one of millions of examples of the government creating or fostering development to put these companies in a position to exploit the technology.

Can I post in random caps, bold, underline, and call you names now?

 

[Nemesis999]

meanwhile we are still pro -sweatshops as long as they pay us taxes...

Of course, why wouldn't we be? All that matters is that the world contiunes to funnel money into the US.

P.S. Sweatshops aren't a "bad" thing. People fight for these jobs because they allow them to feed their families, stop comparing US working conditions to Chinese working conditions. Every time I see some douche wearing some of those anti-sweatshop clothes I can't help but laugh. Congrats on preventing a poor Chinese worker from feeding their family.

 

[Nemesis999]

Somehow I bet every single one of these companies would call development of Mosaic at the NCSA at the University of Illinois, which pretty much lead to the commercial success of the entire fucking internet, as a positive. That's just one of millions of examples of the government creating or fostering development to put these companies in a position to exploit the technology.

Bit slow huh? I'll let you spend some time thinking about where that money comes from. (Here's a hint, it's not just printed at the government's will.)

 

[sfsuphysics]

If HP starts HP-China to serve Chinese customers, in China, with Chinese staff, and Chinses suppliers, then why the HELL should they pay US taxes? That isn't tax, that is theft.

Actually, HP would be using earnings from HP-America, funneling those over to China to build up HP-China over there, in essence lowering their tax liability here because they used that money to "reinvest in their company". This is effectively taking profits made here, and using a loophole to make them non-taxable, you're right that is theft, but it's theft by HP.

This is not about taxing all the money HP-China makes in China for Chinese.


Personally I think corporations need to have countries they belong to, as a US Citizen I have to report earnings I made anywhere on the fucking planet, but a corporation apparently doesn't need to follow by those rules, yet they benefit by the lowest tax bracket they can manipulate.

 

[supaspoon]

Actually, HP would be using earnings from HP-America, funneling those over to China to build up HP-China over there, in essence lowering their tax liability here because they used that money to "reinvest in their company". This is effectively taking profits made here, and using a loophole to make them non-taxable, you're right that is theft, but it's theft by HP.

This is not about taxing all the money HP-China makes in China for Chinese.

That's pretty much how I read it. If it is in fact as Nemesis specifically claims it to be (I don't care to argue wether it is or not), I don't disagree w/ him in the least. But in terms of moving "american made" profits to re-invest into "foriegn profits", I don't see any problem with that money being taxed, as it's revenue earned off american customers that's being siphoned off elsewhere.

Anyway, whichever the case may be, they are two totally different things.