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:: 4.02.2004 ::
More info on Kerry's economic plan
Found on YahooNews: Domestic employment at Intel Corp. slipped by more than 3,300 people last year, but it grew by more than 4,300 abroad. By the end of 2003, the company had $7 billion in cumulative foreign earnings, $700 million more than it had sheltered in 2002, according to SEC filings. The semiconductor powerhouse stated that it "intends to reinvest these earnings indefinitely in operations outside the U.S."
The Kerry campaign said U.S.-based multinational corporations are deferring taxation on $12 billion in foreign earnings each year, a figure that may be low, corporate tax experts say. Corporate tax revenue in 2003 fell for the third straight year, to its lowest in a decade. As a percentage of the economy, business taxes last year reached the second-lowest level since the Great Depression. Few doubt that tax avoidance has been a reason for meager corporate tax collections, and the deferral of taxes on foreign earnings may be one of the biggest factors.
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Under Kerry's plan, U.S.-based companies would have to pay taxes immediately on virtually all foreign profits that are not taxed by another country. Firms could still defer taxation on profits from subsidiaries set up abroad to serve local markets, but if a U.S. company sets up overseas to ship goods back home, taxes would be due in full.
The $12 billion in additional taxes would be used to lower the corporate tax rate to 33.25 percent, from 35 percent. By closing a major loophole used by only the largest multinationals, the plan would bestow a tax cut on more than 99 percent of U.S. companies, Kerry advisers say. Kerry would also try to lure an estimated $639 billion in untaxed foreign earnings back home with a "tax holiday" that would lower the rate on repatriated earnings to 10 percent for one year.
[emphasis added] I can't believe it's a big coincidence that the drop in corporate tax revenue as a result of tax avoidance started the year Bush took office. There is, of course, some disagreement around whether Kerry's plan would actually fix our very broken corporate tax structure. Sounds like a good start, tho.
:: Deb 12:12 PM :: permalink ::
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