In the debate thread several ppl mentioned that Romney will take some heat for his mistake in saying that he has never heard of incentives for moving jobs overseas. Obama did call them incentives. Here is the quote:
“I also want to close those loopholes that are giving incentives for companies that are shipping jobs overseas. I want to provide tax breaks for companies that are investing here in the United States”
I am not an accountant but did some checking and it seems that what Obama means is that corporations are allowed to deduct moving expenses when they move a plant overseas. Well they are allowed to deduct pretty much all expenses (whether they move from Detroit to Birmingham or Detroit to Bangladesh).
That is pretty basic stuff. Businesses deduct expenses from revenues = profits and pay taxes only on profits. This is in no way a method to incentivize the moving of jobs overseas.
In my view the President is being dishonest and Romney is right. No companies move jobs overseas so they can deduct the moving expenses.
If any tax experts can show me an actual incentive in our tax code where a company can profit from moving jobs overseas please fight my ignorance. Remember we are talking about a tax loophole not just that corporate taxes are higher here than most other countries.
The president has attempted to stop companies from taking those deduction when they go overseas and tried to implement “insourcing” by giving incentives to companies to come back to the US. Technically, from what I have read there is no actual tax break to move your company overseas, but you can deduct the cost of doing so which is a tax break, although that is business as usual because as it is not “profit” but the cost of conducting business. I don’t consider this dishonesty but certainly a stretch to say that it’s a tax break to companies that move over seas.
They move their work overseas, they get a tax break. Period.
So a company, to save money on labor, screws the American worker by shipping a plant overseas. Why should the federal government say “Here, let us help subsidize your efforts to put more Americans on the unemployment line?” Job creators, my ass. At least when it goes from Detroit to Birmingham, American jobs aren’t necessarily lost.
Wouldn’t a corporation get the same “tax break” if they moved the manufacturing plant from Mexico to Alabama?
If the President wants to create new law that will punish companies that move jobs overseas, then he should talk about that. But to say that the current tax code encourages those moves is dishonest. There are plenty of reasons why corporations may move jobs overseas, deducting your moving expenses is not one of them.
So by this definition corporations get tax breaks for using pens. They buy pens and deduct the expense. This somehow encourages the use of pens?
Remember the original quote from the has the President saying that he want to remove “loopholes that are giving incentives for companies that are shipping jobs overseas”.
Surely you can see the fallacy in that logic. So either the President doesn’t understand basic business concepts or he is deliberately trying to deceive voters.
That’s ridiculous. That would mean that Obama was in error. Surely you realize the absurdity of that position. You must reorder your perception of the universe and everything in it to revolve around Obama’s every statement being true, insightful and wise.
It’s mis-representitive but it is also a tax break. It’s kind of like telling the truth, but not the whole truth. Yes, technically it’s a tax break but its the the cost of doing business which is deductable and general for all business cost. To make it less of an incentive, companies would not be allowed to deduct those cost. A “tax” on moving out of the country if you will.
A tax deduction is an incentive. The government can give businesses an incentive to spend money, hire, offer benefits to their employees, expand, but why should they offer an incentive-- or tax deduction-- to move jobs overseas? Offer the deduction-- or incentive-- on the condition any move keeps the jobs in the United States.
Obama is saying he doesn’t want to give that incentive any more to a company who moves jobs out of the country.
So your position remains that deducting any expense constitutes an incentive? This is why people who live in the real world can’t take liberals seriously.
As best as I can tell, corporations are taxed on dividend distribution. This is different from individual taxable income, where costs incurred by moving would be subject to sales tax.
What I’m saying is the government has every right to limit what it considers a legitimate business expense for the purpose of deductions.
Deducting expenses from revenues *is *an incentive to spend when you don’t have to pay taxes on that as profit. And if certain expenditures are hurting the economy, get rid of allowing that as an allowable deduction.
Haven’t conservatives been telling us for years that all business decisions, such as opening a factory or even starting a new business, are directly affected by taxation? So as soon as a centrist president tries to use that argument, liberals are unserious? :rolleyes:
I’ll take one more stab at showing why the President is misleading when he calls this an incentive to move jobs overseas and why Romney was correct in his response.
I grant that moving expenses can be deducted from profits thus reducing taxes owed. So a company can reduce their taxable income by moving their production faclity and thus jobs overseas, because the cost to make that move is deductable.
Now, this is the important part, since moving expenses are deductable corporations can also deduct expenses for moving their production facility and thus jobs from overseas to the US.
So now you see that the same “incentive” is there to bring jobs to the US. Ah, but you can’t have it both ways which is why what the President says is wrong, there is no **incentive **in the tax code for “shipping jobs overseas”.
Expenses in general can be deducted. Corporations are taxed on their profits, not their revenues.
Besides, if we aren’t going to allow corporations to deduct moving expenses when going overseas, shouldn’t we also apply that to Americans taking their skills overseas?
It is not correct to say that all corporate business expenses are tax-deductible. Fees for lobbyists are not deductible, entertainment is not deductible(*), capital investment is not deductible, employee compensation beyond a certain per-person threshold is not deductible. The latter exception, whether wise or not, is an example of government attempting to influence behavior via taxation.
(* - I learned this when filing employee expense reports. Company was happy to pay for my entertainment but needed to know if it was entertainment for IRS reporting purposes.)
We can debate whether making the overseas moving expense is wise or not, but, at the margins, it would tend to influence corporate behavior, and would certainly be legal and precedented. To debate whether this should be called “removing a tax deduction” or “removing a tax loophole” is just quibbling.
Removing the deduction will make it slightly less desirable for companies to move jobs overseas, but they will still do it if their win is big enough. Policies with such an effect are logical and should be embraced by sincere free-market advocates – variable tax treatment is more market-friendly than blanket prohibitions. Debating the policy might be useful, but posts in this thread seem to quibble about diction, rather than to compare the candidates’ positions.
But you can have it both ways- or at least the President wants legislation to have it both ways. As far as I can tell, the President would support disallowing those deductions when a company is moving jobs overseas, while allowing them when a company is moving jobs back to the USA.
Removing the deduction will make it slightly less desirable for companies to move jobs overseas, but they will still do it if their win is big enough. Policies with such an effect are logical and should be embraced by sincere free-market advocates – variable tax treatment is more market-friendly than blanket prohibitions. Debating the policy might be useful, but posts in this thread seem to quibble about diction, rather than to compare the candidates’ positions.