AFTER HEARING SO MUCH ABOUT CORPORATE TAX LOOPHOLKES ON C-SPAN, I DECIDED TO CHECK INTO SOME OF THOSE TAX BENIFITS. ALTHOUGH I AM FAMILIAR WITH THE FOREIGN TAX CREDITS FOR INDIVIDUALS AND AM IN FAVOR OF ALL OF THEM I DID NOT HAVE MUCH CURRENT KNOWLEDGE ABOUT CORPORATE FOREIGN TAX CREDITS INASMUCH AS IT HAS BEEN MANY YEARS (1962) SINCE I HAD BEEN AN ASSISTANT TREASURE FOR WHAT WAS THEN, THE LARGEST INTERNATIONAL FOUNDRY CONGLOMERATE IN THE WORLD. . KEEPING IN MIND THAT TAX CREDITS ARE A 100% DIRECT CREDIT AGAINST THE U S INCOME TAX LIABILITY AFTER THAT TAX HAS BEEN DETERMINED WHILE TAX DEDUCTIONS ARE A DEDUCTION FROM TAXABLE INCOME AND THE BENIFIT IS LIMITED TO THE PERCENTAGE TAX RATE OF THE FILER. THEREFORE TAX CREDITS ARE MORE DESIRABLE.
THE FOREIGN TAX CREDIT IS LIMITED TO THE AMOUNT OF US INCOME TAX AND ANY AMUNTS OVER THE THAT IS NOT REFUNDABLE IN THE YEAR OF FILING ALTHOUGH ANY UNUSED FOREIGN TAX CREDIT MY BE CARRIED FORWARD TO FUTURE YEARS IN CERTAIN CIRCUMSTANCES.
THE STATED PIRPOSE OF THE FORIEGN TAX CREDIT TO AVOID DOUBLE TAXATION ON THE SAME INCOME.
THE TAX PAID TO U S STATES IS ALLOWED AS A DEDUCTABLE BUSINESS EXPENSE AND NOT A CREDIT. THE FIRST QUESTION THAT CAME TO MIND IS WHY IS A CORPORATIONS FOREIGN OPERATIONS FAVORED OVER OPERATIONS OPERATIONS IN VARIOUS STATES WITHIN THE UNITED STATES. THE FACT THAT FOREIGN CORPORATE INCOME TAX RATES ARE NOTORIOUSLY LOWER THAN U S TAX RATES SEEMS THAT IT LEAVES THE DOOR OPEN FOR ACCOUNTING PROCEDURES WHICH TRANSFERS MORE PROFITS TO OPERATIONS IN FOREIGN COUNTRY'S IN ORDER TO PAY A LOWER PERCENTAGE IN TAXES WHILE CREATING HIGHER TAX CREDITS FOR DOMESTIC OPERATIONS. THIS SITUATION ALSO ENCOURGES CORPORATIONS TO TRANSFER MOR OF THEIR ACTUAL OPERATIONS OVERSEAS THIS IS CALLED OUTSOURCING JOBS OUT OF THIS COUNTRY. GENERAL ELECTRIC PAYS NO U S INCOME TAX AND SMART ACCOUNTING PRACTICES WITH THE FORIEGN TAX CREDIT VERY POSSABLY COULD BE UTILIZED BY ANY COMPANY SEEKING TO INCREASE THEIR PROFIT MARGIN. GENERAL ELECTRIC JUST ANNOUNCED AN ENTIRE DIVISION BEING TRANSFERRED TO CHINA WHICH COULD MEAN THAT THOUSANDS OF CHINESE WORKERS WILL BE REPLACING AMERICAN WORKERS. WHY SHOULD G E BE ALLOWED TO ENJOY THE BENIFITS OF THE FORIEGN TAX CREDIT WHILE OUTSOURCEING JOBS?? THIS BOTHERS ME.
THEREFORE I WOULD PROPOSE THAT THE FORIEGN TAXES PAID BY AN AMERICAN CORPORATION BE ALLOWED ONLY AS A BUSINESS DEDUCTION, THE SAME AS TAXES PAID TO OUR STATES ARE AND THAT A NEW NON DEDUCTABLE PENALTY FEE BE CHARGED TO ANY CORPORATION OUTSOURCING OUR JOBS OVERSEAS .
SHOULDNT WE PROVIDE MORE INCENTIVES FOR CORPORATIONS TO KEEP THESE PRODUCTS AS AMERICAN, MADE
BY AMERICANS?
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