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Originally posted by HarmlessRabbit
they can use a tax loophole to avoid paying any tax on the revenue generated overseas.
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False. They must whatever taxes they are assessed by the country in which they operate.
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Originally posted by HarmlessRabbit currently American multinationals pay no tax on any foreign income that they can offset with foreign expenses. This gives them an incentive to make foreign expenses as high as possible, meaning move jobs and factories overseas, so that they can offset foreign revenue with the foreign expense.
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This is absurd and completely untrue. No company with a profit motive will ever have any "incentive" to make expenses as high as possible. Reducing one's tax burden by eliminating profits isn't exactly sound financial strategy. The idea of shifting expenses overseas in order to reduce the overall tax burden doesn't make any sense either - you got it completely backwards. Remember, corporate tax rates in the US are much higher than they are in most other nations, so as it is right now, there's an incentive to concentrate
profits overseas where they will be subject to a lower tax rate and shift
expenses to the US to offset the higher American tax rate. If, as Kerry would have it, overseas profits are taxed first by the nation in which they are generated, and then by the US, the incentive to shift those expenses overseas would finally exist.
The Economist, in an article entitled
Clever politics, lousy economics; John Kerry's corporate-tax plan [The Economist, April 3, 2004, p.12], concludes of the proposal: "it is unwise, likely to be counterproductive and seems to be meant mostly to mislead voters."
Tell me, do you support Kerry's plan on its economic merits, or have you been misled?