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[freeofgreed]

Wow Orcale cannot stop being shit can they?

 

[joanot]

A lobby using populism to push his own interests and agenda...

 

[Lagspike_exe]

I don't see this math working. They are getting the tax on their export revenue dropped but instead they will be taxed on their export turnover by other countries.



Both Airbus and Boeing are selling to the whole world. Boeing exports will be taxed everywhere, while Airbus' won't where there is a trade deal with EU. And if USA goes fully protectionist you can bet a lot more trade deals will be finalised outside US.

Depends. If it's a shotgun import tax than Boeing will get taxed probably everywhere and this would probably end up being a net loss for them. If the taxes are sector specific than Boeing will probably not get end up taxed elsewhere.

 

[numble]

Sure, but in the end it adds up to the final price. As usually their clients are governmental companies, the price plays quite an important role here. My point was that I'm not sure the math adds up enough that with all the internal tax cuts they can eat up enough of the price out of the factory to make sure the final price for export is still competitive.

Sure, if USA can subsidy the exports for them, but then all the assumed positive have a very interesting hidden cost.

Here is one place that I found explaining how the combination results in a cheaper export price:

https://www.wsj.com/articles/the-house-gops-good-tax-trade-off-1483660843

Without a border tax adjustment, a U.S. exporter could export a product with a $100 total production cost (including the return on capital) for a price of $100. A retail customer in a country with a 15% value-added tax would pay $115 for that product.

But the border tax adjustment would allow the company to deduct the $100 cost of production when it calculates the tax on corporate profits. That would save $20 under the 20% rate House Republicans propose. That $20 tax saving would reduce the price of the exported product to $80. The retail buyer in the country with the 15% VAT would therefore pay $80 plus 15%, or $92.

If you add a 20% retaliatory tariff to the $80 product, it would be $80 plus 20% or $96 before VAT, and $110.4 after VAT. So it still results in a product that is $4.60 cheaper than the current situation.

If I'm not wrong, according to WTO rules they can pick a tariff level that it's enough to fully compensate the impact of the US tariffs. So it's not about percentages, but the total amount.

Even if you structure a tariff to remove the advantage (and not implement punitive tariffs, which may not be allowed), that just puts Boeing's status back into the status quo, with no disadvantage compared to the status quo.

So in the scenario where no retaliatory tariffs are imposed, Boeing comes out ahead. In the scenario where tariffs are imposed to remove the advantage, Boeing comes back to the status quo vis a vis other foreign exporters, but still gets an advantage of a lower corporate tax rate.

 

[Dehnus]

American Protectionist Racket

Jup, and Boeing and Lockheed are known for their corrupt crap in other countries . They've always been shifty fuckers.

And I WILL NEVER forgive Oracle for how they killed Java.

 

[Dehnus]

Here is one place that I found explaining how the combination results in a cheaper export price:

https://www.wsj.com/articles/the-house-gops-good-tax-trade-off-1483660843



If you add a 20% retaliatory tariff to the $80 product, it would be $80 plus 20% or $96 before VAT, and $110.4 after VAT. So it still results in a product that is $4.60 cheaper than the current situation.



Even if you structure a tariff to remove the advantage (and not implement punitive tariffs, which may not be allowed), that just puts Boeing's status back into the status quo, with no disadvantage compared to the status quo.

So in the scenario where no retaliatory tariffs are imposed, Boeing comes out ahead. In the scenario where tariffs are imposed to remove the advantage, Boeing comes back to the status quo vis a vis other foreign exporters, but still gets an advantage of a lower corporate tax rate.

So basically subsidize your own industry by taxing the others to make your products cheaper in their country? And you do not think they'll add a nice little tax on your products then to protect (or at least level the playing field) their own businesses?

 

[KingSnake]

Here is one place that I found explaining how the combination results in a cheaper export price:

https://www.wsj.com/articles/the-house-gops-good-tax-trade-off-1483660843



If you add a 20% retaliatory tariff to the $80 product, it would be $80 plus 20% or $96 before VAT, and $110.4 after VAT. So it still results in a product that is $4.60 cheaper than the current situation.

Wait, wait. I missed this part. The idea is that the companies can deduct the full cost of the exported goods from their tax base? That's crazy. Boeing will never pay taxes again. Reformulating a bit that part :

But the border tax adjustment would allow the company to deduct the $250 million cost of production of a Boeing 777 when it calculates the tax on corporate profits.

If that's the case then sure, Boeing is earning more money.

Edit: Nikodemos below is right, if it's considered state aid it can be part of the retaliatory tarrifs.

 

[Nikodemos]

So in the scenario where no retaliatory tariffs are imposed, Boeing comes out ahead. In the scenario where tariffs are imposed to remove the advantage, Boeing comes back to the status quo vis a vis other foreign exporters, but still gets an advantage of a lower corporate tax rate.

But countries could impose additional tariffs on Boeing on account of it being a recipient of state aid. In the Airbus-Boeing reciprocal lawsuit (sued each other, accusing their opponent of being a state aid recipient) it was ruled that both direct subsidies (in the case of Airbus) and preferential tax regimens and/or contracting (in the case of Boeing) constitute state aid. An economic giant like China will definitely force the issue.

 

[Dehnus]

Could they really compete against a Boeing contract where Boeing is not taxed in the US at all on the contract (the plan says no tax for export revenue) and is subsidized by border taxes (that is also the plan, that exports are subsidized by imports).

I think Boeing has thought it through and made the decision to support it because they will be at a competitive advantage even in a retaliatory tariff scenario.

Right, so the rest of the world should be thankful that the USA subsidized it's own industry and thus ruins their industry. They also have Economy students you know, and they too will do the exact same if not worse.

WHy would they allow their industry to be ruined by illegal state subsidies (As that is what this is), without doing the same. We basically are looking at the end of the WTO here, and return of trade wars. I only hope they don't succeed in destroying the EU, because trade wars lead to real wars in Europe.


Euros LOVE to beat the living shit out of each other.

And yes it is a subsidy if you can deduct the full price of your product of your company profit. As that means money will be directly flowing from government to corporation. THUS even more money will be printed and a larger percentage will go to the top 1% and the dollar will be even LESS effective as a trading tool in the USA. It already has wallpaper status if the 1% only would cash 10% of their dollars (bringing them back to the street), this will soon be lke 1% cashing 1% = hyperinflation.

 

[hydrophilic attack]

The Tax Foundation estimates the House Blueprint proposal will create 1.7 million new jobs, boost GDP by 9.1%, and increase wages by 7.7%

lol!

i'd really like to see the receipts on that one

 

[numble]

Edit: Nikodemos below is right, if it's considered state aid it can be part of the retaliatory tarrifs.

But countries could impose additional tariffs on Boeing on account of it being a recipient of state aid. In the Airbus-Boeing reciprocal lawsuit (both sued each other, accusing their opponent of being a state aid recipient) it was ruled that both direct subsidies (in the case of Airbus) and preferential tax regimens and/or contracting (in the case of Boeing) constitute state aid. An economic giant like China will definitely force the issue.

You don't get a state aid case unless there is a selective advantage conferred on specific industries or companies. If this applies to all American companies, it is hard to get to a state aid case. Hungary is not charged with providing state aid by having a corporate income tax of 9% for all Hungarian companies.

 

[norinrad]

Getting filthy rich by claiming to support a scheme that would only benefit them. Though conservatives would love this, because JOBS.

 

[Dehnus]

How do I assume that they won't raise American import taxes in retaliation? My last words were "retaliatory tariff scenario."

They can raise a retaliatory tariff, but it needs to be understood that this plan is a combination of 1) lower corporate tax overall 2) zero tax on exports, 3) subsidies for exports and 4) import tariff.

If you just match an import tariff with an import tariff, you are still at a disadvantage.

Thus CHina will ban Boeing from selling to their market. And Nixon's hard work is undone. Ontop of that the EU probably will discuss the same, as it is basically state support for American companies, thus illegal.

It either means the end of WTO or that they legally will not allow Boeing to sell in the EU anymore. It also has some serious impact on the remainder of the JSF sales. An already too expensive product, will then be fully made i nthe USA, and the 1st and second tier partners get screwed over...

Thus meaning htey will AGAIN lower their orders, and look for other sources to fill the gap. Like France's fighters or Germany's Euro fighter. Saab suddenly will also be back in the picture. The only one that gains from this? Russia as it is automatically dissent in NATO, as standardization is one of the key elements of NATO.

TO have 50 different aero planes is not effective as parts can't be exchanged nor can knowledge. Way to go USA.

 

[akira28]

for some reason I equated 'border tax' with "build that wall".
I know it's not quite right, but it doesn't feel totally wrong either.

 

[Nikodemos]

You don't get a state aid case unless there is a selective advantage conferred on specific industries or companies. If this applies to all American companies, it is hard to get to a state aid case. Hungary is not charged with providing state aid by having a corporate income tax of 9% for all Hungarian companies.

I think this is the clincher:

exclude export revenue from taxable income

Having an overall low tax rate isn't the issue, outright excluding specific parts of the revenue flow from taxation is. Since the state is basically giving (back) to the company the % they'd otherwise take in tax from that revenue.

Just because it's state-wide doesn't mean it's not a subsidy. It's just that the US is subsidising their entire export economy.

 

[AlphaDump]

Oracle was cagey as fuck this year when i delt with them, almost refusing to provide their SSAE 16. Challenging me to fly to Colorado to get it myself.


Makes sense.

 

[Dehnus]

You don't get a state aid case unless there is a selective advantage conferred on specific industries or companies. If this applies to all American companies, it is hard to get to a state aid case. Hungary is not charged with providing state aid by having a corporate income tax of 9% for all Hungarian companies.

Then it is the end of the WTO, if it doesn't work anymore for most countries, more of them will leave. I for one will be calling the party I vote for here in Norway to AGAIN (local offfice LOL, but still makes me feel better ) stress the cancellation of the JSF. It costs Norwegian jobs and European jobs that can be better spend by investing in Swedish and French fighters together with our neighbours. If only to hold us over and start a new project for a "Single Engine All Round Stealth Replacement for the F16". I'm sure those billions we would spend on that JSF crap, can start up a nice little project.

The party I vote for is already against the purchase of those overpriced American rust buckets, now it doesn't make economic sense anymore either.

Boycotting US Products, I already started with it After Trump, but now even more so.

 

[mnz]

Yeah, pretty much companies you would expect:
- big
- US focus
- a lot of competition in the world

Old money trying to turn back time.

 

[Ghost]

Oracle will continue producing all their best lawsuits inside the US, go America!

 

[Frankfurter]

Trade wars here we come... everyone loses, fools!

 

[FStubbs]

Jup, and Boeing and Lockheed are known for their corrupt crap in other countries . They've always been shifty fuckers.

And I WILL NEVER forgive Oracle for how they killed Java.

How did Oracle kill java? Isn't it still being used all over the place?

Also, what happened to "business leaders are starting to worry about Trump"? I knew that was bogus.

 

[kmag]

You don't get a state aid case unless there is a selective advantage conferred on specific industries or companies. If this applies to all American companies, it is hard to get to a state aid case. Hungary is not charged with providing state aid by having a corporate income tax of 9% for all Hungarian companies.

WTO has already found against the US for it's FSC policy, and in that case allowed the EU to impose $4bn worth of retaliatory tariffs per year. The Foreign Sales Corporation tax regime allowed US companies tax breaks for export profits.

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds108_e.htm

https://en.wikipedia.org/wiki/Foreign_Sales_Corporation

Trumps plan is state aid and will be treated as such, and unlike the FSC's amount to such an amount that the EU and the rest of the world would have to actually impose penalties on the US. We've been down the trade war route before it always ends the same way.

 

[zonezeus]

So if this leads to retaliatory taxing every airline outside of US flying Boeings will get fucked, right?

 

[SchrodingerC]

Always knew Oracle was shit, but nice of them to officially confirm it

 

[numble]

I think this is the clincher:

Having an overall low tax rate isn't the issue, outright excluding specific parts of the revenue flow from taxation is. Since the state is basically giving (back) to the company the % they'd otherwise take in tax from that revenue.

Just because it's state-wide doesn't mean it's not a subsidy. It's just that the US is subsidising their entire export economy.

That isn't really true, because a VAT refund on export is also not included in a company's taxable revenue, and it is generally not considered state aid. They are trying to structure this by reference to how VAT currently operates on cross-border activity (without the domestic consumption tax element).

WTO has already found against the US for it's FSC policy, and in that case allowed the EU to impose $4bn worth of retaliatory sanctions. The Foreign Sales Corporation tax regime allowed US companies tax breaks for export profits.

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds108_e.htm

https://en.wikipedia.org/wiki/Foreign_Sales_Corporation

Your example actually proves the benefit to these companies. The FSC was introduced in 1984. There was no decision for imposition of sanctions until 18 years later. And even though they were allowed to impose sanctions, the EU did not impose them.

 

[KingSnake]

Your example actually proves the benefit to these companies. The FSC was introduced in 1984. There was no decision for imposition of sanctions until 18 years later. And even though they were allowed to impose sanctions, the EU did not impose them.

EU wasn't in a trade war with US until now.

 

[Nikodemos]

That isn't really true, because a VAT refund on export is also not included in a company's taxable revenue, and it is generally not considered state aid. They are trying to structure this by reference to how VAT currently operates on cross-border activity (without the domestic consumption tax element).

Keyword 'generally'. There's a case for "egregious, widespread and strongly market-distorting". VAT refunds on exports are used as an economic incentive for MSMs, not multibillion megacorps.

Your example actually proves the benefit to these companies. The FSC was introduced in 1984. There was no decision for imposition of sanctions until 18 years later. And even though they were allowed to impose sanctions, the EU did not impose them.

Just because the EU stayed their hand at the time (probably probably in order to extract some concessions) doesn't mean they'll do the same the next time.

 

[kmag]

That isn't really true, because a VAT refund on export is also not included in a company's taxable revenue, and it is generally not considered state aid. They are trying to structure this by reference to how VAT currently operates on cross-border activity (without the domestic consumption tax element).



Your example actually proves the benefit to these companies. The FSC was introduced in 1984. There was no decision for imposition of sanctions until 18 years later. And even though they were allowed to impose sanctions, the EU did not impose them.

The case law is clear now. The EU and the rest of the world would have no option given the far bigger scope of what Trump is proposing else their exporters immediately become uncompetitive.

The EU could immediately impose the FSC tariffs if it wishes as an interim step (they're still on the books), and the rest of the world can apply to do the same individually.

This notion the US is just so powerful it can do what it wants is ridiculous. For one Jimbob Fucksister isn't going to be terribly happy when the flow of cheap consumer goods he fills his house with aren't going to be affordable to him anymore. The US is also absurdly reliant on inward flows of foreign capital to afford it's deficits (deficits which Trump is planning on increasing through the roof), that actually gives the rest of the world decent economic leverage should it choose to utilise it.

 

[numble]

The case law is clear now. The EU and the rest of the world would have no option given the far bigger scope of what Trump is proposing else their exporters immediately become uncompetitive.

The EU could immediately impose the FSC tariffs if it wishes as an interim step (they're still on the books), and the rest of the world can apply to do the same individually.

This notion the US is just so powerful it can do what it wants is ridiculous. For one Jimbob Fucksister isn't going to be terribly happy when the flow of cheap consumer goods he fills his house with aren't going to be affordable to him anymore. The US is also absurdly reliant on inward flows of foreign capital to afford it's deficits (deficits which Trump is planning on increasing through the roof), that actually gives the rest of the world decent economic leverage should it choose to utilise it.

Let's go back to the actual argument, that at best, it confers a benefit to these US companies and at worse, just puts them at the status quo with a lower corporate tax rate to boot. Under the FSC decision, the $4 billion in retaliatory sanctions was designed to be equivalent to the subsidy received by FSCs:

http://trade.ec.europa.eu/doclib/docs/2003/november/tradoc_114513.pdf

In particular, in line with WTO provisions on export subsidies and their interpretation in past cases, the arbitrator’s decision is based on the principle that the US is under an obligation to withdraw the FSC subsidy and that countermeasures for the amount of the subsidy are appropriate to achieve this end.

In the end, it does not refute my argument that at best, these companies receive a benefit, and at worse, they are back to the status quo with a lower corporate tax rate.

I agree that there are many other externalities that can occur. But you need to provide a better cost/benefit analysis regarding why these companies have applied incorrect analysis on whether this proposal could lead to benefits to them.

 

[Chumly]

So basically they claim they are going to "increase" wages beyond normal inflation for getting a tax cut. Why do i not fucking believe this?

Also American consumers get the shaft and end up footing the bill for the tariffs

 

[dumbo]

So:
- US corporations would see a large drop in their tax bills.
- US consumers will see all foreign goods they purchase increase in price (basically in tax). [and goods that contain foreign components etc]

And if other governments reciprocate, then the entire policy is simply "shifting the tax burden from large corporations onto citizens?"

Is there something I'm not seeing?

 

[Aurongel]

Oracle was founded by an immigrant.

 

[LegendofJoe]

I mean isn't protectionism one of the number 1 proven causes of conflict in modern history? Not that various forms of protectionism don't exist right now, but this sort of policy seems unprecedented in today's global economic reality.

It is, it's why strong institutions were set up after ww2 to prevent it. But it's been a while and most of us are stupid so that doesn't matter.

 

[Chumly]

This just didn't happen overnight. I bet trump and his cronies has been calling around demanding that companies support his border tax after it was panned

 

[WedgeX]

Assholes, each and every one.

 

[LucidMomentum]

A lobby using populism to push his own interests and agenda...

Exactly. GE makes so much money, they don't need to even be concerned with this.

Level the playing field my ass. In terms of power generation they've had a monopoly on turbines for decades and they keep pushing it to gouge prices.

Oh, poor GE. SMH.

 

[TarpitCarnivore]

My question about the idea that this can help american jobs/etc is this:

Isn't the big reason jobs moved on is because cost of labor rose and companies didn't want a pay? That coupled with the fact factories in East can adapt more rapidly (per Apple stories) when it comes to shifting processes.

So....is there going to be push from these companies to also pay good living wages, benefits, etc or are we just getting smoke & mirrors BS?

 

[kmag]

My question about the idea that this can help american jobs/etc is this:

Isn't the big reason jobs moved on is because cost of labor rose and companies didn't want a pay? That coupled with the fact factories in East can adapt more rapidly (per Apple stories) when it comes to shifting processes.

So....is there going to be push from these companies to also pay good living wages, benefits, etc or are we just getting smoke & mirrors BS?

That and the simple fact is you don't need as many people to do the work these days in almost every field.

Ford produce more cars than ever with a quarter of their peak workforce.

 

[SporeCrawler]

The US is still in the WTO so these companies can sign whatever dirty rag they want, but the US will likely be held accountable if it agrees to this kind of arrangement. The BRICS will shit bricks, hehehe. This will evoke further protectionism from the countries affected in retaliation. Bad news all around. Really astounding that this is even given remotely considered.

They can talk about job creation as long as they want, but the end result will be to promote inefficiency in the domestic industry and increase cost-of-living for those who depend/buy good and cheap foreign alternatives (read: everyone in the US), e.g. Korean/Chinese/Japanese electronics. Like, significantly. The people who end up hurt because of this kind of measure will see the least of its purported gains. I seriously doubt the US govt. will use that money to improve social services or lower taxes on the poor.

Trump does not feel bound to WTO

 

[onadesertedisland]

Gotta make them jerbs. Give us tax breaks, because we promise we won't just divest those to our shareholders and executives. We promise!!!

 

[YuriLowell]

Pass that tax from companies onto consumers.