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Republican Paul Ryan's plan to create a Territorial Tax

 
 
Reply Tue 1 May, 2012 09:45 am
This is the portion of THE ED SHOW with ED SCHULTZ on April 30, 2012 Monday about Paul Ryan's plan to create a Territorial Tax. It's a conversation between Ed Schultz and David Cay Johnson. BBB

Let`s turn to David Cay Johnston, Pulitzer Prize winning journalist and columnist for "Reuters," and author of the book "Free Lunch."

Boy, I tell you what, this would be a "Free Lunch." You got the right title there, David Cay. We know what these companies are doing. It`s been well documented. But what would this territorial tax do, which is in this Ryan Plan, which the Republicans voted on? Where would this take us?

DAVID CAY JOHNSTON, "REUTERS": Well, what it would encourage companies to do is to take all their intellectual property that they haven`t moved and anything else they can out of country, so that they earn a dollar here in the U.S. and they show it to their shareholders, and then they may magically send it to the Cayman Islands and it disappears to the IRS.

So even if they are making things here in the U.S., they`ll be able to move profits out of the country by having their intellectual property out of the country. Secondly, if they find a place that has similar rules, then you move the jobs offshore and you can still earn tax free profits.

SCHULTZ: This would really grease the skids for more outsourcing of jobs, would it not?

JOHNSTON: Absolutely, Ed. Here is the magic words you need to hear from somebody who really wants to reform the system. No more separate company accounting. That`s the phrase to remember. To the tax man, these companies are thousands of companies, not one company. So they have different tax rules.

But if they are treated as a single company -- no multiple company accounting, only single company accounting, then all of that game playing can stop.

SCHULTZ: This could rob the United States -- and I say rob. I think rob is the correct word here. You make a dollar on our soil with American workers, you got to pay tax on that profit. This, of course, in the Ryan Plan, the territorial tax, hasn`t gotten any attention whatsoever. We got to have a big discussion on it.

This is robbing the treasury. How damaging would this be?

JOHNSTON: It could be very devastating to us. Here is an interesting thing to think about, Ed. From 1961 to 2011 -- that`s half a century -- the amount of the economy -- the corporate income tax fell by 2.8 percentage points. It`s now only 1.2 percent of the economy. Social Security taxes went up by almost exactly the amount that the corporate income tax fell.

So it`s working people. It`s not executives. It`s not companies. It`s working people who have made up for the corporate income tax. Those guys` goal is to get it to zero.

SCHULTZ: Well, keep in mind, the Ryan Plan passed in the House. It will never see the light of day in the Senate. But this is where the Republicans want to go if they get power. They will go right down. This will grease the skids of the corporations. They will get their pockets lined with corporate donations.

This is how the game is going to work. Of course, Mitt Romney says, hey, he loves the Ryan Plan. He called it a marvelous budget, a marvelous plan. Now according to the Citizens for Tax Justice, the Ryan Plan would cut on the richest 10 percent and raise taxes on the bottom 90 percent, and reduce revenue by two trillion dollars over 10 years. Do you believe those numbers?

JOHNSTON: Oh, yes, absolutely. I did my own less sophisticated set of numbers and came up with a similar conclusion. This is a redistribution plan. Take from the many, give to the already rich. The Republicans, Ed, have told us that they know America`s economic problem. It is that the rich don`t have enough.

And they have a solution. They`re going to take it from working people and the poor and the disabled and the children, so the rich can have more and then everything will be great.

SCHULTZ: OK. So I don`t know how Paul Ryan could do any media interviews anywhere without being asked about the territorial tax. Because this is new and it`s in the budget. It`s in what they voted on. And obviously it`s something that could just hurt our economy and our treasury even more.

David Cay Johnston, you`re the best. Thank you.
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BumbleBeeBoogie
 
  1  
Reply Tue 1 May, 2012 09:53 am
@BumbleBeeBoogie,
Apr. 30, 2012
Report: Apple legally sidesteps billions in taxes
By The Associated Press

NEW YORK (AP) — A published report says Apple Inc. uses subsidiaries in Ireland, the Netherlands and other low-tax nations as part of a strategy that enables the technology giant to cut its global tax bill by billions of dollars every year.

The New York Times on Sunday outlined legal methods used by Cupertino, Calif.-based Apple to avoid paying billions of dollars in federal and state taxes.

One approach highlighted in the report: Even though the company is based in California, Apple has set up a small office in Reno, Nev. to collect and invest its profits. The corporate tax rate in Nevada is zero. In California, it's 8.84 percent.

While many major corporations try to reduce their tax bills, technology companies like Apple, Google Inc., Microsoft Corp. and others have more options to do so.

That's because some of their revenue comes from digital products or royalties on patents, which makes it easier for them to move profits to tax-friendly states or countries, the Times said.

In contrast, it's tougher to shift the collection of profits from the sale of a physical product — like groceries or a car — to a tax-friendly haven.

The 71 technology companies in the S&P 500, including Apple, Google, Yahoo Inc. and Dell Inc., reported paying global cash taxes over the past two years at a rate that's, on average, one-third less than other S&P 500 companies, the Times said.

Apple has legally allocated about 70 percent of its profits overseas, where tax rates are often much lower than in the U.S., according to company filings.

The Times cites a study by former Treasury Department economist Martin A. Sullivan that estimates Apple's federal tax bill would have been $2.4 billion higher last year without such tactics.

The newspaper says Apple paid $3.3 billion in cash taxes globally on $34.2 billion in profits last year. That's a tax rate of 9.8 percent.

In a statement, Apple told the Times that it has complied with all laws and accounting rules, and says that its U.S. operations generated nearly $5 billion in federal and state income taxes in the first half of fiscal 2012.

Wall Street analysts predict Apple could earn up to $46.9 billion in its current fiscal year, according to FactSet.
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Baldimo
 
  1  
Reply Tue 1 May, 2012 12:27 pm
I don't understand how they can claim that my taxes will go up when they give companies tax breaks. My tax rate hasn't changed at all and there are no plans to raise the taxes on middle class citizens, so how can they claim my taxes are going to go up? Has Obama been lying about not taxing the middle class?
RABEL222
 
  1  
Reply Tue 1 May, 2012 12:46 pm
@Baldimo,
If you dont like what your seeing change the subject. Strawman.
Baldimo
 
  1  
Reply Tue 1 May, 2012 12:53 pm
@RABEL222,
It's not a strawman. The claims against the Territorial Tax is that it will raise taxes against the middle class because companies will not bring the money back to the US to be taxed. How does this effect my taxes? Its an honest question to the claims.
revelette
 
  1  
Reply Tue 8 May, 2012 10:21 am
@Baldimo,
Quote:
It's not a strawman. The claims against the Territorial Tax is that it will raise taxes against the middle class because companies will not bring the money back to the US to be taxed. How does this effect my taxes? Its an honest question to the claims.


Quote:
JOHNSTON: It could be very devastating to us. Here is an interesting thing to think about, Ed. From 1961 to 2011 -- that`s half a century -- the amount of the economy -- the corporate income tax fell by 2.8 percentage points. It`s now only 1.2 percent of the economy. Social Security taxes went up by almost exactly the amount that the corporate income tax fell.


Its pretty obvious that you have to have money to run the government, if the highest coporations aren't paying taxes, someone is going to have to or we have huge deficits which is what happened. It will be those small businesses and who don't have an army of tax lawyers at their disposal to find those loopholes and tax havens. These corporations have been making record profits while paying very little or none at all, they haven't been hiring with all that profit, they have just getting richer while the rest of us foot the bill in way or another.
http://www.rollingstone.com/assets/images/embedded/06ac84e3615f9f18778aaf3bafb2d12c978b2eba.jpg

How the GOP Became the Party of the Rich

As you can see, spending is not higher than the revenue lost to tax breaks.
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