Financial News

[bmags]

288k jobs today, employment/pop ratio above 2009 levels.

 

Q1 continues to intrigue me. Nobody seems to be moving forward like that was a trend but -2.9 is so huge.

[StrangeSox]

288k jobs today, employment/pop ratio above 2009 levels.

 

Q1 continues to intrigue me. Nobody seems to be moving forward like that was a trend but -2.9 is so huge.

2/3rds of the country was frozen and buried under a foot of snow that entire time.

[bmags]

2/3rds of the country was frozen and buried under a foot of snow that entire time.

 

I believed that for -.1 but 2.9 is huge, and that also wouldn't account for exports declining that quarter, either.

[Balta1701]

I believed that for -.1 but 2.9 is huge, and that also wouldn't account for exports declining that quarter, either.

One other thing buried in those GDP numbers is that health care spending was reported to surge in Q4 and actually declined in Q1 according to the numbers, but if you average those 2 quarters together, the growth in health care spending across those 2 quarters was similar to what it was the previous year.

 

In other words, Health care spending was a big boost to the reported GDP number in Q4 and a big drag on it in Q1. At the same time, health care providers were actually making major changes due to the PPACA actually coming online, so its entirely possible that because of the changes, either companies spent extra in Q4 to get things online and working, or IMO more likely (since the average over those 2 quarters resembles the long-term average), the government just had difficulties figuring out how to count the GDP from that sector during the changes.

[bmags]

Well, much better Q2 at 4% growth, and q1 revised down to -2.1

[Cknolls]

Healthcare spending rose 3.2 % for Q2.....Doesn't seem like they have a handle on how to compute that yet....

 

Also, inventories rose by $93.4 billion for the quarter vs. $35.2 billion in the previous quarter. That alone contributed 1.7% to the headline gain.

 

Good news is fixed investment rose 17%.

 

Bad news is a significant amount of the durable goods increase was due to auto lending, contributing .42% to the headline number and caused durable goods to rise 14%. This is not a sustainable long term trend.

 

But real final sales rose at a quarterly annualized rate of 2.3% for the quarter which is slightly above the 1.9-2.2% trend..

[Jenksismyhero]

Why is Canada's total corporate tax rate 14% lower than the US?

 

http://www.washingtonpost.com/blogs/wonkbl...nd-lower-taxes/

 

 

[Y2HH]

Why is Canada's total corporate tax rate 14% lower than the US?

 

http://www.washingtonpost.com/blogs/wonkbl...nd-lower-taxes/

 

The actual US corporate tax rate is pretty meaningless...they can set it to 100%, but the sheer number of loophoes involved can bring that down to under 5% quite easily.

[Jenksismyhero]

The actual US corporate tax rate is pretty meaningless...they can set it to 100%, but the sheer number of loophoes involved can bring that down to under 5% quite easily.

 

If that's the case why are all of these companies moving their headquarters? Taxes can be avoided to a point, but the US still has the highest combined corporate tax rate in the world. It's sad that Canada offers them THAT much incentive.

[Balta1701]

If that's the case why are all of these companies moving their headquarters? Taxes can be avoided to a point, but the US still has the highest combined corporate tax rate in the world. It's sad that Canada offers them THAT much incentive.

I'm seeing several gradually more convincing perspectives from the left after this arguing that we'd actually be better off cutting the corporate tax rate substantially and raising the personal income tax rate to make up for it since so much money is spent every year on finding and creating loopholes in the corporate tax rate that it impacts the economy and the ability of the government to operate.

[Jenksismyhero]

I'm seeing several gradually more convincing perspectives from the left after this arguing that we'd actually be better off cutting the corporate tax rate substantially and raising the personal income tax rate to make up for it since so much money is spent every year on finding and creating loopholes in the corporate tax rate that it impacts the economy and the ability of the government to operate.

 

Wouldn't you lose a ton of tax revenue doing that?

[Y2HH]

If that's the case why are all of these companies moving their headquarters? Taxes can be avoided to a point, but the US still has the highest combined corporate tax rate in the world. It's sad that Canada offers them THAT much incentive.

 

The benefit is mostly for international businesses, which BK happens to be.

 

This is why you have Apple/Google/MS, etc. hiding money overseas and refusing to bring it back here. Keep in mind when you wield the kind of money these companies have, it's easy to get away with doing that, because they still have plenty of money laying around here, too. But for smaller places that aren't bleeding billions in profits, they HAVE to bring that money back here to invest, expand, etc...and the US loves to double-dip taxation on profits made overseas.

 

In short:

 

1) US HQ'd company makes money in Europe, pays all of the tax due in Europe for doing business there (as they should).

2) Same US HQ'd company needs to bring the money back to the US, does so, and gets taxed on that same money AGAIN.

 

Result:

 

Companies that cannot afford to ignore their money overseas and HAVE to bring it back get to pay tax twice.

 

Those companies say f*** that, and leave.

 

[Balta1701]

Wouldn't you lose a ton of tax revenue doing that?

Read the phrase "increasing the personal tax rate to make up for it". It would be a genuine simplification of the tax code that would put a lot of financial wizards who do nothing but poke holes in the corporate tax code out of business.

 

Of course, since Congress won't do that it's just imaginary, but when you look at the amount of money being blown for no good reason on these accounting tricks to avoid the corporate tax, it starts becoming a decent case.

[bmags]

Yeah, it has a decent amount of support now but i'd bet it wouldn't get past committee.

[bmags]

Also, I'm interested to see if this creates any marketing strategies in US from BK competitors. With so few company owned stores, I'm also wondering how much more difficult it will be for them to get any new food item/campaigns out.

[Balta1701]

Also, I'm interested to see if this creates any marketing strategies in US from BK competitors. With so few company owned stores, I'm also wondering how much more difficult it will be for them to get any new food item/campaigns out.

Isn't that the case anyway?

[Chisoxfn]

Read the phrase "increasing the personal tax rate to make up for it". It would be a genuine simplification of the tax code that would put a lot of financial wizards who do nothing but poke holes in the corporate tax code out of business.

 

Of course, since Congress won't do that it's just imaginary, but when you look at the amount of money being blown for no good reason on these accounting tricks to avoid the corporate tax, it starts becoming a decent case.

So your answer is just tax the people more?

[StrangeSox]

I'd assume that you'd raise the taxes on the higher brackets more. That's where a majority of the profits/dividends are going anyway.

[Jenksismyhero]

I still don't see how that makes up for taxes on billions of dollars of revenue. A company isn't paying out all that revenue to salary, so to change from taxing all revenue to just taxing a portion of the revenue that is designated for salary doesn't really add up, even if you increase the tax rate on the high end.

Edited August 26, 2014 by Jenksismybitch

[StrangeSox]

I still don't see how that makes up for taxes on billions of dollars of revenue. A company isn't paying out all that revenue to salary, so to change from taxing all revenue to just taxing a portion of the revenue that is designated for salary doesn't really add up, even if you increase the tax rate on the high end.

I'm not familiar with the proposal that balta's talking about, but I think it'd be more about targeting dividends and capital gains or something, not wage income.

[Jenksismyhero]

The benefit is mostly for international businesses, which BK happens to be.

 

This is why you have Apple/Google/MS, etc. hiding money overseas and refusing to bring it back here. Keep in mind when you wield the kind of money these companies have, it's easy to get away with doing that, because they still have plenty of money laying around here, too. But for smaller places that aren't bleeding billions in profits, they HAVE to bring that money back here to invest, expand, etc...and the US loves to double-dip taxation on profits made overseas.

 

In short:

 

1) US HQ'd company makes money in Europe, pays all of the tax due in Europe for doing business there (as they should).

2) Same US HQ'd company needs to bring the money back to the US, does so, and gets taxed on that same money AGAIN.

 

Result:

 

Companies that cannot afford to ignore their money overseas and HAVE to bring it back get to pay tax twice.

 

Those companies say f*** that, and leave.

 

Wouldn't they still have the double-dip problem in Canada and other countries (unless the country has some kind of exemption for paying taxes on foreign income)?

[Jenksismyhero]

I'm not familiar with the proposal that balta's talking about, but I think it'd be more about targeting dividends and capital gains or something, not wage income.

 

I still find this hard to believe. Tax that stuff at 100% and you're still only touching a portion of the total pie.

[StrangeSox]

This is from Brookings' Tax Policy Center, and it lays out a couple of options to recapture the capital that's fleeing to lower-tax jurisdictions:

 

http://www.taxpolicycenter.org/publication...l.cfm?ID=904637

 

wo structural reform options can get at the root of the problem.

 

The first option would seek international cooperation on defining the source of corporate income, building on the Organisation of Economic Co-operation and Development's ongoing Base Erosion and Profit Shifting Project. Agreement on common rules for allocating income would stop the shifting of profits to tax havens, without putting U.S. multinationals at a competitive disadvantage. Although consensus would be very hard to reach, all our leading trading partners have a common interest in protecting the corporate tax base.

 

A second, even more far-reaching reform option would scrap the U.S. corporate income tax entirely.

 

American shareholders in all publicly traded companies, domestic and foreign, would be fully taxed, at ordinary-income rates, on their dividends and the annual increases in the value of their shares, whether or not they’ve sold the shares. They would be allowed to claim a full deduction for any annual declines in share values. U.S. tax liability would depend only on the individual shareholder’s residence, not on the corporation’s legal residence or the source of its income.

 

The tax system would no longer discourage domestic investment, reward U.S. companies for shifting income elsewhere, or favor foreign over U.S.-resident companies. It would ensure, however, that American investors pay tax every year on all the income they receive from corporate share ownership.

 

Both these options would confront difficult design choices and significant political obstacles. We do not pretend that either is likely to be enacted soon. At some point, though, the United States has to move beyond tinkering with the current system and fundamentally reform the way we tax corporate income.

[Chisoxfn]

I still find this hard to believe. Tax that stuff at 100% and you're still only touching a portion of the total pie.

Just triple or quadruple the rate? :facepalm

[Y2HH]

Wouldn't they still have the double-dip problem in Canada and other countries (unless the country has some kind of exemption for paying taxes on foreign income)?

 

The problem, if it exists elsewhere, would be a lot less of a tax hit, as you noted, we have the highest tax there is, by far.