Breaking News Bar
posted: 8/11/2014 5:01 AM

U.S. tax law suppresses job creation

Success - Article sent! close

Edd Jarina's letter of July 29 concerning U.S. companies relocating their headquarters outside the U.S. misses the point. This isn't surprising since the news media have done an awful job of explaining the issue.

This process called "corporate tax inversion" has been around for more than 20 years. Profits made in the U.S. by these companies are taxed at U.S. rates, the highest rate in the industrialized world at 35 percent. This issue applies only to overseas profits, which are then repatriated as dividends.

Without this inversion, they are taxed again for the difference between the foreign lower tax and 35 percent. However, these foreign profits are rarely taxed at all in U.S., because to avoid this added tax, most of the profits are held in foreign accounts.

This has two problems. First the money is not available to provide dividends on stocks held by investors, such as all of us, and second, and possibly more important, the money is not available in the U.S. for other capital business expansion and really creating new jobs.

As far as his comments on Apple, it is one of the largest companies in the world and is domiciled here in the U.S. It paid over $13 billion in taxes last year, most here in the U.S., at a tax rate of over 25 percent. Had all the profit from foreign operations come to the U.S. they would have paid about $18 billion in taxes or $5 billion more, for little reason.

What this country needs more than anything else, concerning corporate taxes, is a competitive corporate tax law, which both gets rates down to the rest of the industrialized world's and eliminates many of the loopholes driving investment and job creation away from the U.S.

Richard Francke


Article Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.