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Originally Posted by jyl
So US tax policy incents companies to keep jobs in the US (on shore)? Interesting.
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Only to the extent that you use up most of the profits. Look at the Gawker is organized. They keep most profits form sales overseas and only keep enough profit in the US to pay minimal taxes.
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Originally Posted by jyl
The tax strategy actually has more to do with transfer pricing. Overseas subsidiary spends $1.00 to build the widget and transfers it to the onshore company at $2.00, the onshore company sells it for $2.50 and spends $0.25 on G&A and R&D, that is $1.00 of profit offshore and $0.25 onshore. If your offshore operations are in a low tax jurisdiction, you have successfully lowered your tax bill.
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Agreed. You have nailed the mechanism. I was "schooled" in this by the plant manager in Romania. Everyone talks about worker pay, etc. The tax situation is much more important. What kills me is these taxes go to another country!
Quote:
Originally Posted by jyl
The number of low tax jurisdictions where major operations can be carried out is, however, shrinking.
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China doesn't have low taxes, except when they want your business there. Then they put you in a different tier. If I remember correctly, 25% is "standard" but 10% is more normal. It is a country of "men" not laws. You befriend the right people, your tax rate goes down.
Apple has a ton of overseas cash because it does this. If we changed our taxing methods, a lot of this offshoring would go away.