Wednesday, July 28, 2004

Why John Kerry will hurt Corporate America

Senator Kerry believes that outsourcing needs to be ended. This, from his site is his plan to end it:

"Current tax laws allow American companies to defer paying taxes on income earned by their foreign subsidiaries until they bring it back to the United States. If they keep the money abroad, they avoid paying U.S. taxes entirely."

"Kerry would require companies to pay taxes on their international income as they earn it rather than being allow to defer it. The new system would apply to profits earned in future years only, not retroactively."

Left out of this plan is the fact that US corporations would be double taxed in that they will pay US taxes AND Host nation Taxes! The current system now allows a corporation to us Foreign profits for capital improvements in those foreign operations. This allows for more efficient operations and encourages the maxim utilization of limited resources. This increases the corporation's profit margin and increases its stock value which helps out US investors.

Kerry's plan will Tax those foreign profits. If that is to occur, a US corporation will have no incentive to keep its foreign operations managed from the United States. Therefore, that corporation will split, with its foreign operation moving overseas and its domestic operation remaining here in the US. That would result in Support staff such as accountants, lawyers, and engineers loosing their jobs and being replaced with foreign workers with the new foreign corporation. His plan may also, depending on the amount of foreign business a Corporation does, force some corporations to leave the US all together, allowing them to pay just one tax rather than two.

The fact is, John Kerry's economic plan is DANGEROUS and could destroy our economy.