And another company leaves the country, leaving us with more unemployment.
Making America an ordinary country is going well Mr Obama, keep up the good work.
-- Posted by Have Wheels Will Travel - ΑΩ on Tue, Jun 24, 2014, at 10:10 AM
In any case, he hasn't raised it.
-- Posted by miccheck on Tue, Jun 24, 2014, at 10:22 AM
Facts matter not to this crowd. Thankfully, there are few of them.
-- Posted by L'Espagnol on Tue, Jun 24, 2014, at 10:26 AM
"I haven't seen any evidence that the Medtronic deal will lead to cutting jobs in the U.S. Medtronic bought an Irish company, but I haven't seen where they're going to be moving jobs overseas. I may have missed something."
Yes you may have missed something.... how many people do you suppose may work at the headquarters of one of the world's largest medical device manufacturers?
You might want to check with Minneapolis to see how they feel about the move.
From the article:
"As one of the world's largest medical device companies, Medtronic recently acquired Covidien for $42.9 billion in a move that will relocate headquarters from Minneapolis to Ireland."
-- Posted by Have Wheels Will Travel - ΑΩ on Tue, Jun 24, 2014, at 10:55 AM
"So I'd guess that this merger would lead to shifting a lot of employment from Ireland to the US. That way the newly merged company gets the best of both countries by reducing taxes and reducing labor costs."
-- Posted by Nil on Tue, Jun 24, 2014, at 10:49 AM
Or move the entire manufacturing process to China... or Mexico.
We do not gain as a country when business leaves to escape excessive taxation, no matter how rosy a picture is painted.
-- Posted by Have Wheels Will Travel - ΑΩ on Tue, Jun 24, 2014, at 11:00 AM
Time will tell.
We need to be attracting business to this country instead of watching as they leave. Higher tax rates than other parts of the world are not the way to do it.
-- Posted by Have Wheels Will Travel - ΑΩ on Tue, Jun 24, 2014, at 11:12 AM
InBev said the same thing when they bought Anheuser-Busch in 2008. Then they pretty much cut employees and benefits to the bone in St. Louis and other areas.
And the big benefit of InBev buying A-B was the lower corporate tax rate they benefitted from by moving ownership of the company to Belgium.
Not only do you lose jobs, you lose the profits and some taxes.
-- Posted by not_sorry on Tue, Jun 24, 2014, at 11:44 AM
The incentive to outsource is lower labor cost. If an international, (parent/ subsidiary) business wants to market their products or services in the US or bring foreign earned income back to the US; they are required to establish deferred tax liabilities. The key term "repatriated", meaning when the money or product returns to the US, their liability comes due. (Simplified way too much, very complicated tax topic.)
"Under the current U.S. tax rules, non-U.S. earnings are generally not subject to U.S. tax until the earnings are repatriated. FASB Accounting Standards Codification® 740, Income Taxes, provides an exception to the requirement to recognize deferred taxes on undistributed earnings of foreign subsidiaries and foreign joint ventures if the related undistributed earnings are, or will be, indefinitely invested in the foreign entity. Numerous practice issues arise in applying this guidance, one of which is determining whether the earnings of a foreign subsidiary or foreign joint venture are essentially permanently reinvested, a determination that is especially difficult in times of economic uncertainty.
With limited exceptions, FASB Accounting Standards Codification® 740-10-25, Income Taxes, requires entities to recognize a deferred tax liability or asset for the estimated future tax effects attributable to temporary differences and carryforwards. One exception to that requirement is undistributed earnings of foreign subsidiaries and foreign joint ventures that are, or will be, indefinitely invested in the foreign entity. Numerous practice issues arise in applying this guidance, one of which is determining whether the earnings of a foreign subsidiary or joint venture are indefinitely invested in the foreign entity, a determination that is especially difficult in times of economic uncertainty, which can result in changes in estimated liquidity needs."
-- Posted by Otoe on Tue, Jun 24, 2014, at 11:51 AM
The point, moving overseas does not prevent US taxes due.
-- Posted by Otoe on Tue, Jun 24, 2014, at 11:52 AM
And the key word is "repatriated" as in dividends, etc. right?
No small thing.
-- Posted by not_sorry on Tue, Jun 24, 2014, at 11:56 AM
Dug,
No. (Again, very complicated topic... for short simple explanation.) Dividends refers to shareholders (stockholders), not parent/ subsidiary business "repatriated" income or international "repatriated" income.
"repatriated" means when the funds or assets are funneled back into the US.
Typically, when talking about corporate dividends, one thinks of double taxation... because the corporation pays taxes and so do the shareholders.
-- Posted by Otoe on Tue, Jun 24, 2014, at 12:41 PM
From and article in the NY Times - A-B buyout and impact on US jobs, etc.
-- Posted by not_sorry on Tue, Jun 24, 2014, at 1:19 PM
Dug,
Again, I cannot emphasize the complexity of this topic enough. There are so many variables that impact the various US taxation on income.
With regard to your example, this was an out- of-country (foreign/ alien) corporation that managed to accomplish a hostile takeover of a US company.
In this case, it would have surprised me if US jobs had not been lost (faster). However, if the hostile Parent company continues to do business in the US, they will pay income taxes, but the precise details are way to advanced to get into it in a speak out forum.
But getting back to Wheels topic... taxes are not the primary reason corporations are outsourcing. Overseas labor is so cheap many companies are shipping components overseas, having them assembled, then shipping it back to the US for marketing.
-- Posted by Otoe on Tue, Jun 24, 2014, at 2:07 PM
"But getting back to Wheels topic... taxes are not the primary reason corporations are outsourcing. Overseas labor is so cheap many companies are shipping components overseas, having them assembled, then shipping it back to the US for marketing."
That's not typically true of moves the European Union. There is cheap labour to be found, but not so much in Ireland.
-- Posted by Shapley Hunter on Tue, Jun 24, 2014, at 2:30 PM
In the Medtronic Case, the company would currently pay approximately 45% on corporate earnings, factoring in the federal (35%) and Minn. (9.8%) tax rates, compared to Ireland's corporate tax rate of 12.5%.
I assume the purchase of an Irish company was made to facilitate incorporation, as opposed to simply moving the existing corporate offices to Ireland. The merger likely permits them to enjoy the benefits of an existing corporate registry.
-- Posted by Shapley Hunter on Tue, Jun 24, 2014, at 2:35 PM
-- Posted by Epictetus on Tue, Jun 24, 2014, at 2:07 PM
I agree - it is very complicated. The overall point of takeovers/mergers and the impact on our economy can vary.
I do know, for fact, that the lower tax rate for InBev (EU-Belgium) made the A-B purchase much sweeter for them and saved them money, or made them money, that an American A-B couldn't have.
"n the case of Anheuser-Busch Inbev, in practice, this means that no tax is levied on an amount of 6.378 billion Euros in profit; other branches of AB Inbev pay tax duties, but on a much smaller profit."
Also, a great article on this from Forbes re: taxes and repatriation
"But America isn't the only place Apple paid taxes last year. Less than half of its tax hit falls in the U.S. That's because whenever possible Apple funnels its sales and profits through overseas subsidiaries set up in countries like Ireland and the Netherlands.
It's entirely legal and logical. Why would any company hold its patents and other intellectual property in a California-based company (where licensing fees would be subject to both federal and state taxes) when they can just as easily hold the IP in lower-taxed countries? Ireland has a 12.5% corporate tax. Holland's is 25%.
As a result of channeling profits to low-tax subsidiaries, Apple's overall effective income tax rate is 25%.
Now as long as Apple keeps its overseas profits overseas, those profits are not subject to the higher U.S. income tax. But if Apple were to bring back those profits to its U.S. accounts ("repatriation" is what it's called), it would then have to share some of them with Uncle Sam. How much? Simply the difference between its low overseas tax rate and its higher U.S. tax rate -- 10 percentage points on average.
-- Posted by not_sorry on Tue, Jun 24, 2014, at 3:01 PM
Dug said "repatriation" is what it's called"
Epictetus said"repatriated"
Both have the same meaning.
It appears Google is Dug's friend. I'd bet a substantial amount that Dug had never heard of that word till today.
Miccheck and Dug "think" they know everything about everything. As usual, their responses are Googled.
-- Posted by persnickety on Tue, Jun 24, 2014, at 3:15 PM
Dug merely quoted an article. He even linked the source.
-- Posted by Shapley Hunter on Tue, Jun 24, 2014, at 3:21 PM
And persnickety knows everything without resources. Yes - repatriation and repatriated are identical. The only person here who said they weren't is you?
I know a lot more about the A-B InBev merger than you have a clue about persnickety. I use Google as many many posters here do as well.
I know, personal attacks from sock puppets are easier than using your brain.
Now answer this simple question - how do you find material to read on a subject? Simply key in the URL address for every page you visit? Or just go to "whitehouse.gov"?
-- Posted by not_sorry on Tue, Jun 24, 2014, at 3:22 PM
The government becomes infatuated
when my money is repatriated!
The moment they see those stacks,
they begin tallying up the tax!
So I'll keep me money across the Pond
where, of taxes, they are not so fond.
The Irish may famously pinch a Penny,
but, of taxes, they don't demand so many.
So, as Euros, my money's bound,
in the land of Eire to hang 'round,
whilest, with I pint I'll be relaxed,
knowin' me money shan't be overtaxed!
-- Posted by Shapley Hunter on Tue, Jun 24, 2014, at 3:44 PM
I have a funny feeling you made that up on the fly.
Or did you google it? :-)
Good stuff!
-- Posted by not_sorry on Tue, Jun 24, 2014, at 3:48 PM
That's a Shapley Hunter original. :)
-- Posted by Shapley Hunter on Tue, Jun 24, 2014, at 3:54 PM
Dug said "repatriation" is what it's called"Epictetus said"repatriated"Both have the same meaning.-- Posted by persnickety on Tue, Jun 24, 2014, at 3:15 PM
I was confused by your first statement. You overshot your mouth on that one. I didn't type that comment into the article. It was there from my cut and paste and link.
Try and think before posting. It's hard for you.
-- Posted by not_sorry on Tue, Jun 24, 2014, at 6:13 PM
IMO, when the USA loses 10, 50, or 1000 jobs to another country some of our citizens are without a job and the benefits that go with them from which it will take them years to make up the monetary losses. Companies have the freedom to move there plants to other countries but I feel that when these products come back into the USA for sell there should be a higher import tax on those products to supplement income, retrain or relocate the workers that lost there jobs from the plant closures.
-- Posted by Truth Slinger on Tue, Jun 24, 2014, at 9:20 PM
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