Quote:
Originally Posted by macker
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The system which the oil companies in the 20's created and GE perfected works something like this:
1. Pay tax on your profits to foreign government ie. Saudi Arabia
2. Care less about how much you're taxed by foreign government because
3. Corporation obtains a dollar for dollar tax credit on taxes paid to foreign gov't on US return.
As you all prob. know a tax credit is more valuable than a deduction since it is dollar for dollar rather than 35 cents on the dollar deduction (35% corporate tax rate).
Essentially the US tax payer foots the entire tax bill to foreign govts like China and Saudi Arabia on corporate profits made outside the US.
if you watch the clip and the GE press release that "...GE is scrupulous with its tax obligations in all tax jurisdictions..." is spot on. They couldn't care less how much tax is paid oversees because not only do they pay no US federal tax but receive billions in tax benefits. It is perfectly legal.
I believe when they first (or was it GM?) went to China, the Chinese were shocked that they asked for a corporate income tax when none existed because it would help with the bottom line on the US return.
Corporate welfare at its finest....and don't even get me started on Big Oil.
I think the Obama administration is looking at a possible tax reduction on the corporate rate at least temporarily to repatriate all the multinational cash and infuse gov't revenue.
I know Microsoft is lobbying very hard for a lower tax rate or holiday to bring overseas cash back to the US.
Source: Daniel Yergin's The Prize .