It looks like Bloomberg.com has OweBama's number. - Mercedes-Benz Forum

 
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post #1 of 8 (permalink) Old 06-09-2009, 06:40 AM Thread Starter
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It looks like Bloomberg.com has OweBama's number.

Obama Tells American Businesses to Drop Dead: Kevin Hassett

Commentary by Kevin Hassett

June 8 (Bloomberg) -- I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout.

Once that happens, their new pay czar Kenneth Feinberg can set the wage for everybody and Rahm Emanuel can stack the boards of all of our companies with his political cronies.

I know, it sounds like an exaggeration. But look at it this way. If there were a power ranking of U.S. companies, like the ones compiled by football writers for National Football League teams, Microsoft would surely be first or second to Google. But last week, Microsoft Chief Executive Officer Steve Ballmer came to Washington to announce what Microsoft would do if Obama’s multinational tax policy is enacted.

“It makes U.S. jobs more expensive,” Ballmer said, “We’re better off taking lots of people and moving them out of the U.S.” If Microsoft, perhaps our most competitive company, has to abandon the U.S. in order to continue to thrive, who exactly is going to stay?

At issue is Obama’s policy to end the deferral of multinational taxation.

The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate.

Tax Burden

U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home.

The economically illiterate partisan Democratic view is that this practice is unpatriotic and bleeds jobs from the U.S. The economic reality is that American companies use this approach to acquire market share overseas. The alternative is losing the business to foreign competitors.

Don’t just take my word for it. A recent paper by Harvard economists Mihir Desai and C. Fritz Foley and Berkeley economist James Hines and published in the distinguished American Economic Review, gathered data on American multinationals to explore the impact of foreign investments on domestic U.S. activity.

Encourage Overseas Sales

Their conclusion was striking. The authors found that “10 percent greater foreign capital investment is associated with 2.2 percent greater domestic investment, and that 10 percent greater foreign employee compensation is associated with 4 percent greater domestic employee compensation. Changes in foreign and domestic sales, assets, and numbers of employees are likewise positively associated; the evidence also indicates that greater foreign investment is associated with additional domestic exports and R&D spending.”

So when firms expand their operations abroad, taking advantage of the lower foreign tax rates, it helps their workers in the U.S. Higher sales abroad (surprise, surprise) are good for domestic workers.

It is worth noting that this study, which is confirmed by a boatload of evidence elsewhere, was coauthored by the same James Hines who recently wrote a sweeping review of international tax policy with Obama’s top economist, Larry Summers. Summers has to know what the literature says.

Inexplicable Stance

So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned? How could Obama possibly say, as he did last month, that he wants “to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens?” Further, how could Treasury Secretary Tim Geithner call a practice that top scholarship has shown increases wages and employment in the U.S. “indefensible?”

I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations.

If that occurs, the firms that stay in the U.S. will be at such a huge tax disadvantage that they will absolutely need a “rescue.”

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

To contact the writer of this column: Kevin Hassett at khassett@bloomberg.net

Last Updated: June 8, 2009 00:01 EDT

http://www.bloomberg.com/apps/news?p...d=aaaBdVMkjPnU

It would seem that all is not as well as the liberals here would have you think....

"Negotiating with Obama is like playing chess with a pigeon, the pigeon knocks over all the pieces, on the board and then struts around like it won the game."
Vladimir Putin

"They have gun control in Cuba. They have universal health care in Cuba. So why do they want to come here?"
Paul Harvey 8/31/94


"The only people who have quick answers don't have the responsibility of making the decisions."
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post #2 of 8 (permalink) Old 06-09-2009, 07:51 AM
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Wait, what? Companies will move overseas even more?

So where is McBear? Please tell us why companies won't do this McBear!

Perhaps they offshore so much because it is so expensive to do business on American soil? Nah that can't be it.

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel. --Benjamin Netayahu
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post #3 of 8 (permalink) Old 06-09-2009, 08:33 AM
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Perhaps we can then use tax policy to make it even more expensive to move off-shore. What you guys don't get is that the money and the markets ultimately come from the American people. Perhaps Big Business will have better luck selling their stuff to the Ethopians, but I kind of doubt it.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #4 of 8 (permalink) Old 06-09-2009, 08:50 AM Thread Starter
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Perhaps we can then use tax policy to make it even more expensive to move off-shore. What you guys don't get is that the money and the markets ultimately come from the American people. Perhaps Big Business will have better luck selling their stuff to the Ethopians, but I kind of doubt it.
What YOU don't get is that American companies are moving off shore because it costs less to operate for somewhere else.
Where do most of the computer help sources work from?
Where do most of your clothing companies source their labor?

You got the right idea FTL, make American products even more expensive, that way NOBODY will want them...

"Negotiating with Obama is like playing chess with a pigeon, the pigeon knocks over all the pieces, on the board and then struts around like it won the game."
Vladimir Putin

"They have gun control in Cuba. They have universal health care in Cuba. So why do they want to come here?"
Paul Harvey 8/31/94


"The only people who have quick answers don't have the responsibility of making the decisions."
Justice Clarence Thomas
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post #5 of 8 (permalink) Old 06-09-2009, 10:52 AM
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Simple, basic, economics escapes these Libotard people.

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel. --Benjamin Netayahu
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post #6 of 8 (permalink) Old 06-09-2009, 11:56 AM
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Wait, what? Companies will move overseas even more?

So where is McBear? Please tell us why companies won't do this McBear!

Perhaps they offshore so much because it is so expensive to do business on American soil? Nah that can't be it.
Using Microsoft as the example, what Ballmer failed to mention is that they have been doing that very thing, moving folks offshore for a decade. This is not news. So has IBM, Citibank, Bank of America, Intel, etc.

While the right likes to quote the tax rate "now has about the highest combined corporate tax rate" what they conveniently DON'T quote are examples of a single company that actually PAYS that rate. WHY??? Because of all the loopholes and havens, there is not a corporation in this country that pays 1/3 of the corporate tax rate. But let's not let facts get in the way of a good story.

Now, comes the question. And we will let Ballmer and Microsoft be the example again. If Microsoft wants to move offshore, in protest of US tax rates, let them, but the caveat will have to be that their Corporate HQ and all Staff must go to that country also, not just a post office box and a few staff sorting tax mail. NO SHADOW CORPORATIONS. Let's see just who will make that commitment.

As for Bloomburg having Obama's number, they don't even have a phone book.

McBear,
Kentucky

Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
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post #7 of 8 (permalink) Old 06-09-2009, 12:10 PM
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What YOU don't get is that American companies are moving off shore because it costs less to operate for somewhere else.
Where do most of the computer help sources work from?
Where do most of your clothing companies source their labor?

You got the right idea FTL, make American products even more expensive, that way NOBODY will want them...
So, let's follow your logic for a moment. I have a AIM session going right now with a Project Manager in Mumbai so, if you have questions, he can give specifics.

Just how do you suggest that America readdress its tax codes to account for a third world labor rate that is 1/8-1/12 of US rates. I can hire, if I wanted to [which I won't] skilled software developers from India for $5.50 per hour US. If I move to Chengdu, I can get them for $4.00 per hour. Even if the tax rate in the US is ZERO, US rates cannot compete with third world rates. Corporations will take the $5.50 rate, bill it at $150.00 to the client and take the profits, whether there is a tax on it or not.

IBM, as an example has laid off 12,000 of its top rated software/hardware engineers in the past six months while at the same time opening up new shops in both Chengdu and Mumbai. Not surprisingly Wall Street was happy. Not surprisingly, states who pay unemployment insurance were not so happy. Nor were the state and federal revenue departments who lost tax revenue on 1.2BILLION in income.

Explain again how just dropping that tax rate would stop this?

McBear,
Kentucky

Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
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post #8 of 8 (permalink) Old 06-09-2009, 12:24 PM Thread Starter
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Explain again how just dropping that tax rate would stop this?
Not a whole lot to explain, just where do companies go, where the taxes are higher, or where they are lower. Even you ought to be able to figure that one out McB....

Wasn't all that long ago, the company I worked for built a plant in Pennsylvania, the reason.... Pennsy gave them a tax break to build there.
The idea was to help the economy, and give workers a decent shot at a job. Shortly after the plant opened, the Union went on strike for higher wages and more time off, they settled, and then hunting season opened, and since no one was there to build anything, the plant shut down. Permanently.

The point being that the company went there and not somewhere else for two reasons:
(1) They got an offer they couldn’t refuse.
(2) They wanted to have the product say “Built in America by American workers.”
Want more, you know damn well that story isn't unique.

Question back at you: Where are wages higher, in high tax States, or lower tax States....

"Negotiating with Obama is like playing chess with a pigeon, the pigeon knocks over all the pieces, on the board and then struts around like it won the game."
Vladimir Putin

"They have gun control in Cuba. They have universal health care in Cuba. So why do they want to come here?"
Paul Harvey 8/31/94


"The only people who have quick answers don't have the responsibility of making the decisions."
Justice Clarence Thomas
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