Walgreen Co looked hard at doing one of these—buying an overseas company and then reincorporating in that overseas jurisdiction to lower its US tax bill, a bill flowing from a world-leading 35% tax rate. Indeed, Barclay’s had estimated that Walgreen would save $797 million a year in taxes if it carried through. They were brow-beaten out of the move, though, by the Federal government.
Now, Senator Chuck Schumer (D, NY) and his Senate cronies are looking at getting in the way of inversions generally.
The proposal…would restrict the practice of earnings stripping, where US companies borrow money from overseas parents and deduct the interest expense on US taxes.
Here is an argument for not doing business with the Federal government at all. It’s rapidly becoming not worth the cost—in hassle, in dollars, in business’ ability to control over their own operations. This is another of President Barack Obama’s barrage of Executive Orders, and this is how The Wall Street Journal described it over the weekend:
Under the order signed last week, contractors and subcontractors who receive more than $500,000 in federal money will be obliged to report to government agencies any labor-law violations going back three years. The order covers violations of everything from family and medical leave to federal wage and hour laws in the three years before applying for a contract.
Ilan Brat and Giada Zampano wrote, in a recent Wall Street Journal piece, about job protections and their effects on the prospects of today’s children and young adults in Europe. The whole article is well worth the read for its specifics, but from my perspective, the following is the money quote, from one of those young adults, Ms Serena Violano, a 31-year-old still sharing a room with her older sister in their parents’ home:
For our parents, everything was much easier. They had the opportunity to start their own life. Instead, we don’t have any guarantees for our own future.
Secretary of the Treasury Jack Lew originally (originally: three weeks ago, in mid-July) acknowledged he had no authority to alter the tax implications of US businesses reincorporating overseas in order to reduce their US tax burden.
Now he’s looking at (not for) ways to “meaningfully reduce the tax benefits after inversions take place” because reducing a company’s cost structure, the legally and fiscally required behavior of any company’s managers, by making use of this “unpatriotic tax loophole” is unpatriotic. I’ll ignore the fact that what’s unpatriotic here is the usurious tax rates charged American companies and the zeal with which this administration attacks American companies for worrying about their bottom line more than they worry about government imperatives in order to get to a different point. As The Wall Street Journal put it,
This is a preview of
The White House as Tax-Writing Authority
. Read the full post (245 words, estimated 59 secs reading time)
Russia has announced that it won’t buy certain goods from certain of the nations that are sanctioning Russia over its invasion of Ukraine and its fomenting of rebellion in eastern Ukraine. This is a trade war that Russia shouldn’t be expected to win.
For one thing, Russia’s economy is the size of Italy’s and more moribund, so any trade war can only hurt Russia relatively more than it can hurt the far larger economies of the US, the EU, Australia, Canada, even Norway, who are the targets of the Russian boycott.
For another thing, here are some facts related to this boycott.
Dr Ben Carson had a couple thoughts a while ago; they’re still valid.
What we need to do is come up with something simple. And when I pick up my Bible, you know what I see? I see the fairest individual in the universe, God, and he’s given us a system. It’s called a tithe.
We don’t necessarily have to do 10% but it’s the principle. He didn’t say if your crops fail, don’t give me any tithe, or if you have a bumper crop, give me triple tithe. So there must be something inherently fair about proportionality. You make $10 billion, you put in a billion. You make $10 you put in one. Of course you’ve got to get rid of the loopholes.
I’ve written before about this matter. This week, Spiegel Online International, not a fortress of Conservatism, brought it up again.
John Kerry has spent months rushing from one conflict to the next, but has little show for it. His failures are symptomatic of an America that lacks a foreign policy identity—and of a country that seems uncomfortable with its role as a superpower.
In recent days, global diplomacy has seemed like an absurd form of theater, with John Kerry in the role of the tragic hero. He doesn’t look like the secretary of state from a world power, Haaretz jeered, but like “an alien who just disembarked his spaceship in the Mideast.”
In a recent op-ed piece, The Wall Street Journal correctly decried the Financial Industry Regulatory Authority’s CARDS program. This program, cynically named “Comprehensive Automated Risk Data System,” is a program that wants to require all of our brokerage houses to report to FINRA massive amounts of data concerning our investment accounts, including what we’re doing in (with?) those accounts.
The op-ed correctly objected to CARDS’ massive collection of data, saying
FINRA says the ocean of data will help it spot a problem almost in real time, far earlier than if it showed up during a regular examination. …
The Metropolitan Opera singers union resumed contract talks on Monday after a two-month hiatus, but union officials said they had little hope of reaching an agreement before a threatened lockout.
And no wonder, with such an awesome sense of entitlement.
“He doesn’t want to help us maintain our instruments,” said chorus member Jean Braham, commenting on the effect [Met General Manager Peter] Gelb’s proposed high-deductible health plan could have on singers’ voices and bodies.
“We are the artists,” Ms Braham said, her voice cracking. “We are the product. The fact that he accepts no responsibility and no accountability is just incredible to me.”
…to disband the NLRB.
McDonald’s Corp could be treated as a joint employer with its franchisees in labor complaints, according to a National Labor Relations Board legal determination….
The relationship between a franchisee and the parent franchisor varies in the details of the franchise contract. However, the general nature of the reputation is quite limited. The franchisee gets to use the franchisor name and the franchisor’s marketing and accounting assistance, and it gets the franchisor’s market power in holding down the cost of supplies. In return, the franchisee is bound to the franchisor’s rules regarding the use to which the franchise name is put and the nature, quality, and standardization of the product being sold. The franchisee also is required to refrain from activities that would result in denigration of the franchise name.