Thursday, April 30, 2009
Oversea profits
Article from, April 22nd, The Wall Street Journal
Under current law, U.S companies can defer taxes indefinitely on the profits they have earned overseas until that money is repatriated back into the country. The Obama administration has proposed changing this law,making off shore profits taxable. The affect of the law would be that congress now has the power to tax outside of the U.S borders. Last time I checked, the U.S constitution that gave congress the power to tax, only concerned domestic activity. Congress does not have the authority to tax economic activity outside of the country. If the money comes back into the country, I can see ligitimate taxation, but until it does, taxing that money is outside of congressional power. On the other hand, I have personally known people who were working in the United States on a work visa from some other country, say Canada, who did not have to pay taxes. Whats going on? People who are working in the United States, who drive on our roads, pollute our air, are protected by our national defence, police, and fire departments don't pay taxes; but U.S companies profits from economic activity taking place in another country are being taxed. Crazy! As of now, the profits are not taxed until the re-enter the country, but the Obama administration wants to change this. The concern regarding this issue is that government personel are concerned that they are loosing out on a great deal of money. First, they are not loosing out on anything because the profits are not being made in the U.S. Secondly, if they want to increase their revenue, tax the workers who are here on visas. Thats what I would do if I ran the show anyway.
Under current law, U.S companies can defer taxes indefinitely on the profits they have earned overseas until that money is repatriated back into the country. The Obama administration has proposed changing this law,making off shore profits taxable. The affect of the law would be that congress now has the power to tax outside of the U.S borders. Last time I checked, the U.S constitution that gave congress the power to tax, only concerned domestic activity. Congress does not have the authority to tax economic activity outside of the country. If the money comes back into the country, I can see ligitimate taxation, but until it does, taxing that money is outside of congressional power. On the other hand, I have personally known people who were working in the United States on a work visa from some other country, say Canada, who did not have to pay taxes. Whats going on? People who are working in the United States, who drive on our roads, pollute our air, are protected by our national defence, police, and fire departments don't pay taxes; but U.S companies profits from economic activity taking place in another country are being taxed. Crazy! As of now, the profits are not taxed until the re-enter the country, but the Obama administration wants to change this. The concern regarding this issue is that government personel are concerned that they are loosing out on a great deal of money. First, they are not loosing out on anything because the profits are not being made in the U.S. Secondly, if they want to increase their revenue, tax the workers who are here on visas. Thats what I would do if I ran the show anyway.
