Posts Tagged ‘Microsoft’

Obama Administration A Fifth Column Destroying American Competitiveness From Within

June 10, 2009

Obama has a plan to make American business as competitive in the world economy as the proverbial Dodo bird for the sake of “economic justice.”

Obama Tells American Businesses to Drop Dead: Kevin Hassett

June 8 (Bloomberg) — I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout.

Once that happens, their new pay czar Kenneth Feinberg can set the wage for everybody and Rahm Emanuel can stack the boards of all of our companies with his political cronies.

I know, it sounds like an exaggeration. But look at it this way. If there were a power ranking of U.S. companies, like the ones compiled by football writers for National Football League teams, Microsoft would surely be first or second to Google. But last week, Microsoft Chief Executive Officer Steve Ballmer came to Washington to announce what Microsoft would do if Obama’s multinational tax policy is enacted.

“It makes U.S. jobs more expensive,” Ballmer said, “We’re better off taking lots of people and moving them out of the U.S.” If Microsoft, perhaps our most competitive company, has to abandon the U.S. in order to continue to thrive, who exactly is going to stay?

At issue is Obama’s policy to end the deferral of multinational taxation.

The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate.

Tax Burden

U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home.

The economically illiterate partisan Democratic view is that this practice is unpatriotic and bleeds jobs from the U.S. The economic reality is that American companies use this approach to acquire market share overseas. The alternative is losing the business to foreign competitors.

Don’t just take my word for it. A recent paper by Harvard economists Mihir Desai and C. Fritz Foley and Berkeley economist James Hines and published in the distinguished American Economic Review, gathered data on American multinationals to explore the impact of foreign investments on domestic U.S. activity.

Encourage Overseas Sales

Their conclusion was striking. The authors found that “10 percent greater foreign capital investment is associated with 2.2 percent greater domestic investment, and that 10 percent greater foreign employee compensation is associated with 4 percent greater domestic employee compensation. Changes in foreign and domestic sales, assets, and numbers of employees are likewise positively associated; the evidence also indicates that greater foreign investment is associated with additional domestic exports and R&D spending.”

So when firms expand their operations abroad, taking advantage of the lower foreign tax rates, it helps their workers in the U.S. Higher sales abroad (surprise, surprise) are good for domestic workers.

It is worth noting that this study, which is confirmed by a boatload of evidence elsewhere, was coauthored by the same James Hines who recently wrote a sweeping review of international tax policy with Obama’s top economist, Larry Summers. Summers has to know what the literature says.

Inexplicable Stance

So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned? How could Obama possibly say, as he did last month, that he wants “to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens?” Further, how could Treasury Secretary Tim Geithner call a practice that top scholarship has shown increases wages and employment in the U.S. “indefensible?”

I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations.

If that occurs, the firms that stay in the U.S. will be at such a huge tax disadvantage that they will absolutely need a “rescue.”

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

Is the destruction of America deliberate?

It’s certainly possible.

Another possibility is that Barack Obama and Timothy Geithner have never actually had to make a payroll, or run an actual business.  It’s all just monopoly money for these guys.  They live in a world of theory, and their theories are all crap.

Microsoft CEO Says Obama Tax Plan Will Result In Companies Leaving USA

June 6, 2009

The imperial presidency has issued a new edict to force jobs out of the United States.

What happens if you make the cost of doing business too expensive in a given area?  Either businesses go out of business or they leave for greener pastures.

And, under Obama, the “greener pastures” are anywhere but America.

Tax plan would send jobs offshore, Ballmer says

Microsoft CEO Steve Ballmer said the software company would move some employees offshore if Congress enacts President Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.

Microsoft CEO Steve Ballmer said the software company would move some employees offshore if Congress enacts President Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.

“It makes U.S. jobs more expensive,” Ballmer said Wednesday. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

Obama on May 4 proposed outlawing or restricting about $190 billion in tax breaks for offshore companies over the next decade. Such business groups as the National Foreign Trade Council, the U.S. Chamber of Commerce and the Business Roundtable have denounced the proposed overhaul.

U.S. tax rules let companies defer paying corporate rates as high as 35 percent on most types of foreign profits as long as that money remains invested overseas. Obama says he wants to end such incentives to keep foreign profits tax-deferred so that companies would invest them in the U.S.

It’s kind of like New York taxing cigarettes to $11 per pack.  Liberals THINK they will A) pay for their liberal social programs and B) get people to stop smoking.  But they are not living in the real world because what will actually happen is C) people will begin to buy black market cigarettes.

The infamous luxury tax is a great example:

Starting in 1991, Washington levied a 10% luxury tax on cars valued above $30,000, boats above $100,000, jewelry and furs above $10,000 and private planes above $250,000. Democrats like Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share and privately about convincing President George H.W. Bush to renounce his “no new taxes” pledge.

But it wasn’t long before even these die-hard class warriors noticed they’d badly missed their mark. The taxes took in $97 million less in their first year than had been projected — for the simple reason that people were buying a lot fewer of these goods. Boat building, a key industry in Messrs. Mitchell and Kennedy’s home states of Maine and Massachusetts, was particularly hard hit. Yacht retailers reported a 77% drop in sales that year, while boat builders estimated layoffs at 25,000. With bipartisan support, all but the car tax was repealed in 1993, and in 1996 Congress voted to phase that out too. January 1 was disappearance day.

But liberals have to learn the same basic lesson over and over again (which is another way of saying liberals never learn).

Only a fool thinks you get more of something by taxing it.  Only a fool thinks that people won’t change their behavior in order to avoid paying higher taxes.

Which is another way of saying liberals are fools.

Income tax revenues should be a frightening predictor of the future.  Compared to the 2007/2008 average, individual tax revenues were down 40%, and corporate tax revenues were down a stunning 67%! And while these numbers obviously reflect the poor economy, they are also a harbinger of tax sheltering to come as people try every trick to avoid paying taxes that everyone knows will go up and up (just like the taxes on cigarettes).   Obama and the Democrats are going to have to raise taxes across the board in an increasingly desperate attempt to monetize the massive budget gap caused by their massive spending.

And one of those “tricks” will be to simply leave the country to get away from Obama and his frankly stupid policies.