Multi-National Companies

[wind_magic]

Or, why I really dislike the new knee jerk reaction to "off shore tax cheats".

Imagine you get to together with a couple of people from here at Sailnet and decide to start a company together manufacturing boats. You are from the U.S., another is from Canada, another Australia, and a few others from other countries. You all throw in a little seed money and you want to incorporate and build a business together.

You look around and decide that the best place to incorporate is in the islands, low taxes, good banking, pretty scenery for the annual corporate meeting, etc, seems like the best choice because Canada, the U.S., Australia, etc, all have really high corporate tax rates, so why incorporate there, it doesn't make any sense to do so.

After incorporating you open bank accounts in three different countries, Mexico, Switzerland, and Australia, for various reasons, and you open a brokerage account somewhere too to hold idle cash so it isn't sitting there doing nothing.

Few of the guys decide to do the design and manufacturing, some others decide to do sales, so some get together and build a small place in Mexico to build the boat - why Mexico ? Because it's warm, land is available there, labor is inexpensive and easily trained, etc, good choice, so you build a little shop there and start building boats.

Guys doing sales figure the best market is in Australia, Europe, and America, so they open three sales offices, one in each country and start printing up brochures and selling boats to anyone who will buy one. Boat needs a warranty so they make a deal with a company in Japan to underwrite the insurance and make good on the deals, for their percentage of course.

After things get moving the group brings in a few more people and decides it wants to issue some shares and get more people involved, let the owners cash out a little equity to build some big houses, buy a few cars, and the like. So everybody gets together and decides they will list in Dubia because that is where they think they will get a good reception, and their second choice is possibly on the Nasdaq in the United States as an alternate, maybe an ETF on another exchange in Europe.

So the company is moving along, has investors from all over the world, more bank accounts than you can shake a stick at, and is paying people in 17 different currencies ... the simple question is ... WHAT NATIONALITY IS THIS COMPANY ? Is it where it is incorporated, where its original owners live, where it builds boats, where it sells them, where it does its banking, where it trades its stock, or in this day and age is just in whatever country decides it wants a little more tax money and accuses everyone of being offshore tax cheats ???

This is a VERY important question now - because the current administration of the U.S. has now come out and decided to fight "tax cheats" who are incorporated off-shore, doing business in other countries, and "hiding" money in non-U.S. banks.

[jackdale]

Some have been using the phrase "trans-national". They transcend the nation and enjoy a certain sovereignty with no loyalties.

These are the companies that pay mercenaries to overthrow governments that dare question them.

ITT maintained its businesses in both the US and Germany throughout WWII, and helped fund the overthrow the democratically elected government of Chile.

Be very afraid.

[PBzeer]

Taxes affect decisions. It isn't like this is some radically new concept. It's also one of the reasons the US tax code is over 67,000 pages long. And while they may be able to reap some short term benefits from their "crackdown", it's very likely they'll end up chasing those dollars to somewhere more sheltered. There's already a growing list of US companies seeking to establish their base in Switzerland, for example.

What's a bit ironic here, is after months of decrying the "greed" of Wall St, there seems no limit to the greed of Pennsylvania Ave for tax dollars.

[LoTech]

Originally Posted by jackdale

These are the companies that pay mercenaries to overthrow governments that dare question them.

You just described the US gummint perfectly.

[LoTech]

Originally Posted by wind_magic

This is a VERY important question now - because the current administration of the U.S. has now come out and decided to fight "tax cheats" who are incorporated off-shore, doing business in other countries, and "hiding" money in non-U.S. banks.

Is this REALLY at the top of your crises list? You must be rolling in money. 99.99999 percent of Americans will never get the chance to go offshore, let alone incorporate there.

[camaraderie]

The simple solution is the FAIR TAX which eliminates such concerns and is indeed fair to all.
The solution is not making us less globally competitive and creating more IRS auditing jobs. The solution is making our country a magnet for job creation instead of exportation....and getting rid of the IRS.

[wind_magic]

Originally Posted by LoTech

Is this REALLY at the top of your crises list? You must be rolling in money. 99.99999 percent of Americans will never get the chance to go offshore, let alone incorporate there.

Interesting argument - so, basically, you're just telling me to shut up, that's your whole argument. Well that's great, thanks, I file that in the same folder as "cause I said so ..."

[sck5]

"and getting rid of the IRS."

you're joking right? I know its popular to say such things but no IRS means no roads, no ports, no army, no courts, no public health service, etc. etc. To imagine all that government pays for can be done by the private sector is just magical thinking. aint gonna happen and we all know it. Its extremist statements like this that explain why the Republican party clocks in at about 20% nowadays.

[Selkirk]

Originally Posted by sck5

"and getting rid of the IRS."

you're joking right? I know its popular to say such things but no IRS means no roads, no ports, no army, no courts, no public health service, etc. etc. To imagine all that government pays for can be done by the private sector is just magical thinking. aint gonna happen and we all know it. Its extremist statements like this that explain why the Republican party clocks in at about 20% nowadays.

He said get rid of the IRS, not "stop paying taxes".

[Selkirk]

........WindMagic makes interesting post. For the sake of brevity I will not quote it all....

This whole idea of going after "tax cheats" and "closing loopholes" gets trotted out with nearly every change of command.
But it won't go anywhere. Congress will never go for it.
I think Obama knows that, too. I think he's grandstanding for his voter base, knowing all along that they won't follow up and understand the complexity of the situation and that they'll just pump their fists in the air and scream about Bush some more.

Falls in the same category as his "saving or creating 3 - 4 million new jobs". There's not going to be any accountability; he'll just claim he succeeded.