Class Links

All quiet on the Western Blunt- This was probably my favorite blog because of the many entertaining marijuana pop culture references. I think Bud Wiser, the creator of the blog, did a great job of selecting a topic that would appeal to his audience of college students. More importantly I think the blog did a great job of arguing the pro legalization of marijuana, by pointing out the absurdity to moral and legal objections to legalization of marijuana. Also the blog touched on all of the positive results from taxation of marijuana.
Fluid and Flames of the Future- I feel this blog touched on one the very important issues of today in finding an alternative to fossil fuels to power our nation. I was a frequent visitor of this blog and I saw a gradual growth of knowledge on the debate over new green technologies. Nature Man was able to maintain an unbiased opinion in his debate by talking on both the positive and negative aspects of all of the green technologies that he referred to in his blog.
A World of Power- I enjoyed this blog mostly because it kept me up to date on the current situation between America and other foreign countries. This blog definitely develop my knowledge personally on how America’s actions affect the rest of the world. I also enjoyed the conversations I had on this blog through comments with Nature Man that futrther develop an understanding on certain issues.

Implication's Post

The future of the corporate tax policy will most likely be decided by the current political administration no later than the next couple of years. There are two options that congress will take, the first being to adopt the new policy on corporate tax made by the Obama Administration. http://www.law.stanford.edu/news/details/2882/Obama's%20Push%20To%20Levy%20Taxes%20On%20Overseas%20Profits%20Alarms%20Tech%20Giants/ This proposal will shut down the loopholes in the current corporate tax structure that grant many deductions and tax cuts to multinational companies. These loopholes are put in the current system to allow American Corporations to compete against international competitors, which operate under a much more profitable tax structure. As a result, our companies will either leave the United States to find another country to remain successful, or they will stay in the U.S earning smaller profits and be less competitive with the rest of the World. Due to the easiness of which companies can outsource and move capital around because of the today’s technology, I think the first result is more likely to happen. http://www.businessweek.com/bwdaily/dnflash/content/may2009/db2009054_337394.htm The implications our corporations leaving the country take a very negative effect on our economy as we lose market shares overseas, Jobs, and income from American corporations.
If Obama’s proposal plan is shot down by congress our corporations will remain in the U.S, but they will still be paying more money to foreign nations collectively then to the U.S. Even though American Corporations will still be paying foreign nations more taxes, it is better alternative then losing all of its businesses to foreign competitors. http://www.notoriouslyconservative.com/2009/06/obamas-multinational-tax-policy.html For our counties future I hope that business lobbyist in congress will prevent Obama’s proposal from being adopted as it would create a business environment impossible to compete internationally.

Annotated linkes

http://www.businessweek.com/investor/content/jul2009/pi20090716_980847.htm
This link discuses the backlash of all of America’s Corporation’s outsourcing production to overseas countries. It identifies the growing problem of all of America’s Corporation tax revenues and jobs going to overseas nations. It leaves the treasury to fund higher unemployment levels with less money coming from corporations to contributing to tax revenues. Secondly it shows how it has a drastic loss in our Nations’ GDP overtime.
http://www.businessweek.com/bwdaily/dnflash/content/may2009/db2009054_337394.htm
Obama’s new proposal on corporate tax will leave American Multinationals Corporations vulnerable to foreign take over. The new proposal that closes loopholes that allows American Corporations to compete against a double tax policy. Corporations fearing large profit losses and other overseas competitors with higher stock prices will leave the U.S. moving their headquarters overseas.
http://www.heritage.org/research/Taxes/wm1891.cfm
Talks on the “lock in effect” on selling stocks referring to the effect that higher corporate tax rates have on investor’s willingness to sell. Investors are more likely to hold onto their stock in companies longer fearing paying higher tax on profits earned in stock trades. The “lock in effect” does not promote economic growth as it limits reallocation of low performing stocks to more profitable investments. High rates also slow an economy as it deters people from investment which weakens businesses.
http://blogs.wsj.com/washwire/2009/10/06/is-a-corporate-tax-overhaul-next/
This article touches on how reform on corporate tax policy will be the next issue for the current administration to overhaul. Costly reforms such as health care, energy, and bailouts has left congress with gaps to fill in our deficit that corporate tax increase will have to cover. It also sees a reason for reform as more and more of our American Corporate tax revenues go to foreign government.
http://www.notoriouslyconservative.com/2009/06/obamas-multinational-tax-policy.html?showComment=1257790439992#c5946449808393694721
This post is from another blogger that is concerned with how high corporate tax rates hurt the U.S.’s economy. He similar to myself fears that Obama’s new corporate proposal puts our multinational business at such a disadvantage that they will the country to find better tax structures in foreign countries to prosper in. He also explains how the loopholes that the president wants to get rid of in his new proposal keep our Multinational corporations in America.

Wrong Answer

It is important that we build on this momentum and establish a foundation for long-term, sustainable growth that will benefit American workers. During these fragile economic times, we need policies that foster growth. However, the current proposal to raise taxes on American companies that do business overseas by an estimated $200 billion over 10 years will do just the opposite. Obama wants to close down loopholes in the tax that are in place to allow Corporations to thrive and compete with the rest of the world. Companies from almost all other industrialized nations are not required to pay taxes on international revenues to their home nations. Instead, they operate under territorial tax systems in which they pay corporate income taxes only in the country where revenues are earned. The U.S. employs a worldwide tax system where earnings are taxed where revenues are earned, and then taxed again in the U.S. To compensate for this double taxation, which places American companies at a disadvantage with foreign rivals, the U.S. has created a system of accounting rules and deferrals to help maintain competitiveness. If Obama’s new proposal was to be adopted and loopholes in the current corporate tax system where closed our business would see no profit. To compensate corporations would raise the price on their products which hurts consumers and also lower wages which harms workers. With less money in the hands of workers, or consumers, and higher prices on consumer products will cause a drought in spending and only further contribute to a toileting economy. Then the extra tax collected from corporations will be spent to fix problems created by the excess taxes. In the current economic state we don’t need to be creating anymore problems to fix, we already have enough as it is.

Stop Overseas Tax Loss

As an attempt to correct my slight conservative bias on the issue of corporate tax, I think that it is important for me to recognize the current democratic administration’s views and arguments. Obama has been voicing his opinion that the current U.S. corporate tax code gives incentives to business’s to outsource production overseas. The problem is not that our corporations are not successful, but that are only successful while producing overseas and as a result we do not see any fruits of their tax revenues. For the first time ever in 2008 it was reported that American Corporations paid more taxes overseas than domestically. Obama’s proposal to fix the problem with the current tax structure has not gone over well with some of major S&P Corporations. The proposal, combined with a $60.1 billion plan to limit many expense deductions for American companies that take advantage of laws allowing them to defer tax on foreign profits and a $43 billion crackdown on abusive foreign tax credits, would be the biggest tax increase on U.S. corporations since 1980’s.
Corporate and most of conservative America think that Obama’s new plan would destroy the competiveness and success of U.S. business. I understand President Obama’s concern with all of our corporate money being taken away by other countries. At the same I fear that his plan could do more could than harm than good if our corporations are not able to compete or thrive with large profits, especially at a time of such instability in our economy.

Self Analysis

Through my blogging I have become increasingly more knowable on the issue of the corporate tax rate in America. Furthermore I was come to realize how important the role the corporate tax rate plays in the economy. The corporate rate in America makes operating a business in America very expensive. As a result many of our corporations have outsourced their production to foreign nations to avoid one the highest corporate tax rate in the world. This creates problems for the U.S. treasury to collect on American corporate profits because it makes it easier for Corporations to hide and shelter profits in overseas subsidies. Additionally most of America’s corporate tax revenue is given to foreign nations compared to the amount that U.S. actually receives.
One thing that I have tried to correct in my argument is my biased toward the more conservative view on the corporate tax rate. I have over looked the liberal perspective on the corporate tax rate because I feel it restricts the success of our corporations. However through my research on the issue I have come to agree with some of the liberal arguments on the corporate tax. Mainly how currently loopholes in the tax policy allow overseas corporations deduct earnings before paying taxes back to the U.S. I think that by being able to identify some of bias in my debate has enabled me construct a more complete argument. I have also learned that constructing an argument is more about understanding both sides of a issue, so that you are more able to attack the opposing view better.
http://taxprof.typepad.com/taxprof_blog/2009/08/us-corporate-tax-rate.html
http://www.irishtimes.com/newspaper/finance/2009/1014/1224256613632.html
http://www.notoriouslyconservative.com/2009/06/obamas-multinational-tax-policy.html
http://www.businessweek.com/bwdaily/dnflash/content/may2009/db2009054_337394.htm
http://www.nytimes.com/2009/10/10/opinion/10herbert.html?_r=2&adxnnl=1&adxnnlx=1255298642-G1jSgwC4ZSjCarrVMXf87A
http://www.nytimes.com/2009/10/10/opinion/10herbert.html?_r=2&adxnnl=1&adxnnlx=1255298642-G1jSgwC4ZSjCarrVMXf87A
http://www.heritage.org/research/Taxes/wm1891.cfm
http://www.businessweek.com/investor/content/jul2009/pi20090716_980847.htm
http://www.law.stanford.edu/news/details/2882/Obama's%20Push%20To%20Levy%20Taxes%20On%20Overseas%20Profits%20Alarms%20Tech%20Giants/
http://www.cbpp.org/cms/index.cfm?fa=view&id=450

GDP

As the globalization becomes increasingly more prevalent in the international business world a nations GDP becomes increasingly important. So much so that a healthy economy should lower the corporate tax to incentivize more production and investment. There a several factors that are contributing to the importance in the GDP. First, financial engineering increasingly allows for cheap recharacterizations of income for tax and book purposes, making tax obligations easily disappear. Second, the growing global reach of companies and falling costs of global transactions means that profits can be reallocated to lower-tax jurisdictions with a fair amount of ease. Finally, changing patterns of incentive compensation have sharpened incentives to squeeze profits out of parts of the organization that were heretofore not profit centers.
The expansion of business is what is most important in today’s global economy. The best way to ensure a thriving economy is to offer low rate and tax policies that attracts many investors and businesses. A common misconception that people don’t understand is that a high corporate tax rate is not the best for a government to raise tax revenues. A much better strategy to get the most money from corporations is set low rates to allow corporations to make as much money as possible. It may seem like you are taking a smaller piece of the corporate pie, but in the end there will be a bigger pie to cut from. Lower rates also increases tax compliance by keeping the corporations happy with higher profits, they will shelter less profits.