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Republicans Unvel Tax Bill (re. Boeing)  
User currently offlineJoni From , joined Dec 1969, posts, RR:
Posted (7 years 11 months 2 weeks 3 days 1 hour ago) and read 1752 times:

It looks like some of the tax breaks Boeing has been enjoying are going to be repealed:

http://online.wsj.com/article/SB114721087272448163.html?mod=yahoo_hs

In a surprise move, Republican tax writers responded to the European Union by moving to reduce a tax benefit for U.S. exporters that EU leaders opposed. The bill is designed to roll back a provision in a 2004 international tax law that allowed U.S. manufacturers to continue receiving an outdated tax credit on long-term sales contracts inked before 2004.

5 replies: All unread, jump to last
 
User currently offlineTimboflier215 From United Kingdom, joined May 2005, 1317 posts, RR: 1
Reply 1, posted (7 years 11 months 2 weeks 3 days 1 hour ago) and read 1748 times:

It's good news in so far as the threat of a trade war is somewhat lessened, providing that ir really is progress. Time for the EU to step up to the plate and start making concessions too.

User currently offlineFlying-Tiger From Germany, joined Aug 1999, 4150 posts, RR: 37
Reply 2, posted (7 years 11 months 2 weeks 3 days 1 hour ago) and read 1720 times:

To be honest - what good is that really? "Long-Term sales" contract inked before 2004 - how many orders/deals are actually really affected by this move?


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User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 3, posted (7 years 11 months 1 week 6 days 23 hours ago) and read 1574 times:

According to this source, the new code will only cost Boeing around USD48M next year, and less thereafter.

http://yahoo.reuters.com/stocks/Quot...42-01_N12437941&symbol=BA.N&rpc=44


User currently offlineJayinKitsap From United States of America, joined Nov 2005, 769 posts, RR: 1
Reply 4, posted (7 years 11 months 1 week 6 days 21 hours ago) and read 1519 times:

Most countries have a VAT type of tax on businesses on their income, but exports often have a reduced or eliminated tax. The WTO agreements were generally done to accomodate a VAT type of tax system.

However, the US has an income tax that taxes the profits of the business not the revenues. The previous and current tax law in the US gave credits of various sorts to companies that export. However, these laws have run afoul of the WTO because many of the credits etc are industry specific, not general. Finally, the US politicians are beginning to wake up to the need to properly reform the corporation portion of the tax code to a simpler, fair system that also fully complies with all international agreements.

It will still take a long time, possibly several elections will go by before it actually gets fixed properly. The correct fix will actually help all exporters tremendously. It will take a long time because the correct fix causes a lot of politicians to lose some power, as all of the hodgepodge credits that they can champion (and receive campaign contributions from companies that want "access to good government") would be gone.


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 38
Reply 5, posted (7 years 11 months 1 week 6 days 20 hours ago) and read 1477 times:

Quoting JayinKitsap (Reply 4):
Most countries have a VAT type of tax on businesses on their income, but exports often have a reduced or eliminated tax. The WTO agreements were generally done to accomodate a VAT type of tax system.

VAT applies to sales/revenue, not net income. But you are right, VAT taxes are allowed even though they effectively subsidize exports and penalize domestically consumed imports.

Quoting JayinKitsap (Reply 4):
However, the US has an income tax that taxes the profits of the business not the revenues. The previous and current tax law in the US gave credits of various sorts to companies that export. However, these laws have run afoul of the WTO because many of the credits etc are industry specific, not general. Finally, the US politicians are beginning to wake up to the need to properly reform the corporation portion of the tax code to a simpler, fair system that also fully complies with all international agreements.

No the problem is that the US has a global income taxation system as opposed to a territorial income taxation system, unlike many other countries. US pols want to tax income generated by operations of US companies in other countries when those profits are brought back to the US. The problem is that the pols then want to make the income tax system territorial for profits generated by exports specifically. They should just make the system completely territorial, that way profits from exports would not be taxed, making US exports more competitive, plus the corporate profits that were not being repatriated from foreign operations to avoid taxes would reduce the current account deficit and could be invested in activities here in the US rather than be reinvested abroad. A win-win-win in my book.



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