Joni
Topic Author
Posts: 2613
Joined: Thu Aug 10, 2000 11:05 pm

Republicans Unvel Tax Bill (re. Boeing)

Wed May 10, 2006 9:14 pm

It looks like some of the tax breaks Boeing has been enjoying are going to be repealed: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to roll back a provision in a 2004 international tax law that allowed U.S. manufacturers to continue receiving an outdated tax credit on long-term sales contracts inked before 2004.
 
timboflier215
Posts: 804
Joined: Sat May 21, 2005 7:54 am

RE: Republicans Unvel Tax Bill (re. Boeing)

Wed May 10, 2006 9:16 pm

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.
 
Flying-Tiger
Posts: 3924
Joined: Mon Aug 23, 1999 5:35 am

RE: Republicans Unvel Tax Bill (re. Boeing)

Wed May 10, 2006 9:22 pm

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?
Flown: A319/320/321,A332/3,A380,AT4,AT7,B732/3/4/5/7/8,B742/4,B762/763,B772,CR2,CR7,ER4,E70,E75,F50/70,M11,L15,S20
 
Joni
Topic Author
Posts: 2613
Joined: Thu Aug 10, 2000 11:05 pm

RE: Republicans Unvel Tax Bill (re. Boeing)

Sat May 13, 2006 11:41 pm

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
 
JayinKitsap
Posts: 627
Joined: Sat Nov 26, 2005 9:55 am

RE: Republicans Unvel Tax Bill (re. Boeing)

Sun May 14, 2006 1:28 am

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.
 
atmx2000
Posts: 4301
Joined: Wed Oct 13, 2004 4:24 pm

RE: Republicans Unvel Tax Bill (re. Boeing)

Sun May 14, 2006 2:25 am

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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