T Nation

Taxes

[quote]usmccds423 wrote:
I’m curious why, when talking about jobs outsourced, labor costs in the U.S. aren’t talked about. In my view labor unions = regulation = higher costs, which almost force industry out of the country.

We shouldn’t pay assembly line workers $0.25 an hour, but we also shouldn’t pay them the unrealistic salaries many have.

I remember reading an article years ago, and I’ll see if I can find it, where Ford workers had to report to a classroom because they just didn’t have work for them, but they still collected their 50k+ salary.

That is a cost of labor problem and a competitive disadvantage my American companies face. How do you propose they stay solvent without going overseas?
[/quote]

Thing is that Americans by and large want high salaries and low prices so they can consume, consume, consume…

Their is no way they would tolerate the price increases that would come with keeping manufacturing and low skilled non-service labor in America. So there is no way to stay competitive if you keep all the means of production in America.

Toyota has plants in the US, they do fine. So that plays into the union aspect as well, but I don’t think it can be 100% blamed on the unions.

Thing is, our own consumption habits (and addiction to it) has caused the need for globalization, and in the long run these jobs help the people they went to very, very much.

The easiest answer is to change the homeland. Change how we approach things, and figure out positions for these people in other fields or capacities. “bringing back” the jobs is a lost cause.

[quote]countingbeans wrote:

[quote]CornSprint wrote:
I don’t disagree with you on this point[/quote]

I’m glad you don’t disagree because that is, absolutely, the reason the credit exists.

It is the equivalent of your home state giving you a credit for taxes paid to a foreign state. Novel concept, I know.

I have no idea where reciprocation comes from. Either your home state offers the credit or it doesn’t. And while I haven’t worked with all 50 states, I have yet to come across one that has an income tax and doesn’t offer the credit.

What you are confusing, and the president was lying about, is an economic incentive that is the result of poor domestic policy and the behavior of the citizenry with actual tax laws and rules that give “breaks” or “subsidies” to companies that move over seas.

There is no gimme from the government that you get for globalization. The cost savings come from the fact it is cheaper to operate in a country other than America.

There are no breaks to reduce. That is the lie part.

Two points: 1) anyone that complains about globalization and buys Apple products is by far, the biggest hypocrite I can point to in this situation.

  1. Adding penalties, taxes or otherwise making operations worse in America will undoubtedly and unequivocally push more activity into foreign markets, encourage keeping more profits in the foreign markets, and a reduction of focus on domestic market places.

Globalization isn’t bad. The fact it costs you 35% of your profit to bring that profit back to America is the problem here. [/quote]

Good call to move this into this thread Beans-I had the same thought before signing off last night.

As far as your response to my first line (about it seeming equivalent to working in one state and not another) goes, the point of me saying that was to say “Yeah, I get it, you’re just replacing states with countries. Doesn’t seem weird to me in that regard.” It isn’t a novel concept-don’t see why you had to be flippant. The reciprocation I was alluding to is the system in some states where you do not pay the income tax in the first place. Rather than getting a credit for later, you just don’t give money to the state you’re working in. Instead the full amount goes to your residential state. Honestly, for the purposes of this discussion it was unneeded information.

As far as your two points: 1-I agree to a point? Not sure what response you want or expect on this one. If somebody is vehemently opposed to exporting jobs because 'Murica and then shops at Walmart/is an Apple slave sure. I don’t however see a problem

2-The point you make about the true benefit of moving jobs overseas being the reduced costs to operate in those countries is a given. I will take you at face value that there are no tax benefits (or loopholes) used to make moving overseas result in a tax break for these companies. However, I would hypothesize that there IS a marginal cost that could be imposed on business that outsource that would be small enough to make operating overseas and bringing money back to the US profitable for these companies but still raise revenue that is currently missed out on. Essentially finding a middle ground between “Full credit!” and “I don’t care if you’ve been taxed on that already, you’re paying full tax again”. There is a benefit to putting that money made abroad back into the US, it is just about skimming from the top of that benefit to increase revenue while making sure the bulk of that incentive is still in place.

I recognize that you are not going to like that. My incredibly overly simplified example would be Business A operates abroad and makes $100. It pays 10% tax on this and let’s say it costs 10% instead of 20% of revenue to run the operation. If, when they want to move the money back into the US, instead of saying “Well we tax 20%, so since you have paid 10% on tax already, we will take only another 10% now” (leaving them with $70) you would say “Well we tax 20%, and you have paid 10% on tax already. However, you are operating abroad, so we will take an additional 1%. You now owe us 11%” (leaving them with $69). The company would now save money compared to operating entirely in the US (where for the same revenue made they would have $60), still leaving incentive to move money back in, but also allowing you to raise additional revenue. They still save money and you have increased your share by 10%.

I’m probably missing something (not a CPA-an engineer) but this appeal to my common sense. I do understand that tax codes often tend to be anything but…

I would also be remiss to not mention the fact that many have weighed in saying that companies that move overseas are still eligible for many of the same deductions they would receive if they moved down the street.

[quote]CornSprint wrote:
I would also be remiss to not mention the fact that many have weighed in saying that companies that move overseas are still eligible for many of the same deductions they would receive if they moved down the street.[/quote]

Right, because deductions are a cost of business.

What else would you expect?

I mean it isn’t like you suddenly don’t spend money because you move.

I would expect that you do not count money spent on moving operations out of the country in the reduction of your tax burden. I understand they are spending money to move still: it is the purpose/shift in location of the move that is problematic.

Your point is absolutely legitimate-I understand the logic behind why they still get the deductions. My contention is simply that moving out of the country should be treated differently than moving within the country.

[quote]CornSprint wrote:
I would expect that you do not count money spent on moving operations out of the country in the reduction of your tax burden. I understand they are spending money to move still: it is the purpose/shift in location of the move that is problematic.

Your point is absolutely legitimate-I understand the logic behind why they still get the deductions. My contention is simply that moving out of the country should be treated differently than moving within the country.[/quote]

I know when it comes to moving an employee out of the country you cannot deduct the expenses if it is perm. As far as moving an operation: even if it is deductable, 90% is a capital expense. Which means you depreciate the costs.

Moving to a foreign country isn’t like tearing everything down and shipping it to indo-china. You build a new plant and buy new shit in the new country.

I’m poor, lazy and unemployed. How do I get free stuff? Thx.

Well, I’ll go ahead and ask my long-shot question here. And, will probably be laughed at for it, but eh, doesn’t hurt to ask.

Say one is in the fitness industry and on a bulk. If they use themselves in promo material could the cost of excess food be written off?

I’m going to say no way, but would be sweet if legally allowed as a business write-off.

and wow, just realized those are calculators in your avatar.

[quote]jehovasfitness wrote:
Well, I’ll go ahead and ask my long-shot question here. And, will probably be laughed at for it, but eh, doesn’t hurt to ask.

Say one is in the fitness industry and on a bulk. If they use themselves in promo material could the cost of excess food be written off?

I’m going to say no way, but would be sweet if legally allowed as a business write-off.[/quote]

Could they be written off? Sure. Would they hold up under audit? I doubt it.

I wouldn’t advise anyone in that situation to write off the food.

However, an eating contest professional, I could see getting the deductions.

[quote]countingbeans wrote:

[quote]jehovasfitness wrote:
Well, I’ll go ahead and ask my long-shot question here. And, will probably be laughed at for it, but eh, doesn’t hurt to ask.

Say one is in the fitness industry and on a bulk. If they use themselves in promo material could the cost of excess food be written off?

I’m going to say no way, but would be sweet if legally allowed as a business write-off.[/quote]

Could they be written off? Sure. Would they hold up under audit? I doubt it.

I wouldn’t advise anyone in that situation to write off the food.

However, an eating contest professional, I could see getting the deductions. [/quote]

Thanks, but damn!

[quote]jehovasfitness wrote:

[quote]countingbeans wrote:

[quote]jehovasfitness wrote:
Well, I’ll go ahead and ask my long-shot question here. And, will probably be laughed at for it, but eh, doesn’t hurt to ask.

Say one is in the fitness industry and on a bulk. If they use themselves in promo material could the cost of excess food be written off?

I’m going to say no way, but would be sweet if legally allowed as a business write-off.[/quote]

Could they be written off? Sure. Would they hold up under audit? I doubt it.

I wouldn’t advise anyone in that situation to write off the food.

However, an eating contest professional, I could see getting the deductions. [/quote]

Thanks, but damn!
[/quote]

I think a professional body builder might have a shot at the expenses staying, but the major issue here is matching principle.

Not only are your going to have to prove the excess food was in fact excess, but that the additional food directly relates to a professional revenue producing activity.

Your biggest challenge will be proving which calories were extra and the distinct and different costs above and beyond normal sustenance calories the expensed calories cost. Then you’ll have to prove that you are doing this for professional reasons and not hobby or in the normal course of life…

It would be an uphill fight, and I would imagine IRS people will laugh at your story for decades, seeing as the loss upon examination or god forbid tax court would likely be humiliating and talked about in newslettes and magazines as one of those “crazy” cases.

Per the norm, Bill Whittle killing it here

And JFK was a Democrat which shows you just how far off track the parties have gotten.

james

[quote]atypical1 wrote:
And JFK was a Democrat which shows you just how far off track the parties have gotten.

james[/quote]

Shit, today he would be in the TeaPArty, lol

:wink:

That’s actually true. Look at a guy like Teddy Roosevelt who busted up corporations while expanding U.S. influence. What party would he be in? But that’s a whole different thread.

james

http://finance.yahoo.com/news/frances-rich-tax-deals-paris-183845732.html

The french have fucked themselves, lol.

my my my, look at the government. Giving people interest free loans…

Super happy that I not only pay my own loans, in full, but pay taxes so I can pay the interest on other people’s loans for them.

What you discussed below is very insightful and I apologize for the name calling. I disagree on the laffer curve but I respect that you did not act like I did.
Here are two better links disputing reagenomics from his former economic advisors. To me the laffer curve cannot fix the debt and deficit as thats the perspective I come. I do not believe a legitimate debt reduction policy can come from tax cuts while maintaining current expenditure levels. We all know we cannot have it both ways in life (endless government programs and tax rate cuts)

  1. The economic effects of the tax reform act of 1986
    http://www.jstor.org/discover/10.2307/2729788?uid=3739472&uid=2&uid=3737720&uid=4&sid=21101280296991

  2. Behavioral Responses to Tax Rates: Evidence from TRA86
    http://www.nber.org/papers/w5000

Thing is that Americans by and large want high salaries and low prices so they can consume, consume, consume…

Their is no way they would tolerate the price increases that would come with keeping manufacturing and low skilled non-service labor in America. So there is no way to stay competitive if you keep all the means of production in America.

Toyota has plants in the US, they do fine. So that plays into the union aspect as well, but I don’t think it can be 100% blamed on the unions.

Thing is, our own consumption habits (and addiction to it) has caused the need for globalization, and in the long run these jobs help the people they went to very, very much.

The easiest answer is to change the homeland. Change how we approach things, and figure out positions for these people in other fields or capacities. “bringing back” the jobs is a lost cause.

What you discussed below is very insightful and I apologize for the name calling. I disagree on the laffer curve but I respect that you did not act like I did.
Here are two better links disputing reagenomics from his former economic advisors. To me the laffer curve cannot fix the debt and deficit as thats the perspective I come. I do not believe a legitimate debt reduction policy can come from tax cuts while maintaining current expenditure levels. We all know we cannot have it both ways in life (endless government programs and tax rate cuts)

  1. The economic effects of the tax reform act of 1986
    http://www.jstor.org/discover/10.2307/2729788?uid=3739472&uid=2&uid=3737720&uid=4&sid=21101280296991

  2. Behavioral Responses to Tax Rates: Evidence from TRA86
    http://www.nber.org/papers/w5000

Thing is that Americans by and large want high salaries and low prices so they can consume, consume, consume…

Their is no way they would tolerate the price increases that would come with keeping manufacturing and low skilled non-service labor in America. So there is no way to stay competitive if you keep all the means of production in America.

Toyota has plants in the US, they do fine. So that plays into the union aspect as well, but I don’t think it can be 100% blamed on the unions.

Thing is, our own consumption habits (and addiction to it) has caused the need for globalization, and in the long run these jobs help the people they went to very, very much.

The easiest answer is to change the homeland. Change how we approach things, and figure out positions for these people in other fields or capacities. “bringing back” the jobs is a lost cause.