What kind of tax breaks does the U.S. give to oil companies and to corporations that send jobs overs

[napi21]

http://www.factcheck.org/askfactcheck/what_kind_of_tax_breaks_does_the.html

Companies with overseas subsidiaries can keep their income untaxed by the IRS if they don't transfer that revenue back to the U.S. Oil and gas companies received tax breaks and subsidies from a 2005 energy bill, but the bill led to a net tax increase for them.

I always trusted FactCheck, but I don't agree with their explaination on this one. Please check out the detail on their page and tell me what YOU think.

MY opinion is if a corp. doesn't have to pay US taxes on foreign earnings unless or until they bring that $$ back to the US, they are then free to spend $$ on anything anywhere, supporting and/or improving any other persons or countries economies tax free, as long as it's NOT the US! They get the additional advantage of haveing cheap labor thus making even MORE profit to support somewhere else!

I was an accountant but steered away from tax law as far as I could get, but I do know that there are THOUSANDS of tax laws in the code that are targeted at specific Corporations and industries but applicable to no others. THAT'S one of the reasons our tax code is around 44,000 pages long! The explaination is that article doesn't ring true to me, or at the very least, not the whole truth!

[dmallind]

1. Sure - sort of

If a company makes a profit in Angola it's not taxed in the US, and if that company decides to use that profit in investing in new plants in Abu Dhabi then it never will be (of course the idea that there is discrete allocation of funds like this is a gross simplification).

But it's taxed, or not, according to Angolan law instead. It's not that US-based global companies ONLY pay US taxes, or even should only pay US taxes. Certainly we expect foreign companies with profit centers in the US to pay taxes.

I worked for a company with offices in Germany a while back and we specifically wanted the profit to be recognized in the US not Germany as the US corporate tax rate is much lower, so we essentially incorporated the German offices as a US entity and made sure that all profit-making transactions were authorized and completed in the US (since that's what determined where the tax liability was under German law) so it also works both ways. We were selling to European customers and supporting them from Germany, but taking the profit and paying taxes in the US. This is of course, on a much bigger scale, why so many car makers have opened US plants. Not only do they get easier access to the world's biggest market, but they take the profit in the US and pay lower US taxes than in their home country. Especially since they can usually strongarm at least a few layers of government into giving them tax breaks for creating jobs here.

It's obviously impossible to say "all companies should pay US taxes even if they didn't make the money here" without causing other governments to follow suit.

Now specific tax breaks to offshoring companies are a different issue, and we should certainly make sure we reduce the incentives to do that, but that should not anbd could not realistically be by taxing income that is never repatriated in the first place.

Personally, in order of feasibility, I'd suggest the following:

No government contracts to companies not based in the US where a US alternative exists.

Corporate Alternative Minimum Tax based on a sliding scale of ratio of US labor size - so in other words we tax say 1% of revenue if less than 50% of workforce is US based, and cut that by 0.2% for every 10% of labor force in US - so a corp with 80% US workers would pay 0.4% revenue and 100% US companies would pay zero. (of course this would lead to registration of HQs abroad like Accenture et al but see below)

Same idea based on percentage of US revenue for foreign based companies. This of course could only apply to companies who have an actual US presence and who recognize profit here. We have absolutely no jurisdiction to make Nokia pay US taxes if they shipped everything from Finland and had no US sales office, manufacturing, distribution etc. The only thing we could do then is apply tariffs to incoming cell phones, which would be problematic and also likely to cause retaliation. However in the Accenture example where much of their workforce and even more of their profit comes from US activity thenw e could do this.

Start all over again and tax corporations on the basis of revenue and/or expenditure period rather than profit. The "fair tax" idea may actually come in handy here. Very unlikely and a complete turnaround, but probably the best option I can think of.