Wednesday, June 10, 2009

Obama Tells Business To Drop Dead

Kevin Hassett had this piece on Bloomberg.
In it he says:
"I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout.

Once that happens, their new pay czar Kenneth Feinberg can set the wage for everybody and Rahm Emanuel can stack the boards of all of our companies with his political cronies."
Heaven knows, we are seeing that already happening. Obama's plan is to increase corporate taxes to staggering amounts and to also enact a new multinational tax policy. Do you hear the business death bell tolling?
"Microsoft Chief Executive Officer Steve Ballmer came to Washington to announce what Microsoft would do if Obama’s multinational tax policy is enacted.

“It makes U.S. jobs more expensive,” Ballmer said, “We’re better off taking lots of people and moving them out of the U.S.” If Microsoft, perhaps our most competitive company, has to abandon the U.S. in order to continue to thrive, who exactly is going to stay?

At issue is Obama’s policy to end the deferral of multinational taxation.

The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate."
The way it works now according to the U.S. tax code is that U.S. firms can set up a subsidiary in a country that has lower taxes. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home.

Democrats think this practice is unpatriotic and bleeds jobs from the U.S. They obviously don't understand that businesses are established to make a profit and to grow and to create innovation. Most of those same Democrats probably have never ever run a business themselves, but they sure would like to confiscate the wealth of a business and give it to everyone else. (Ever read Ayn Rand, "Atlas Shrugged"? - it's a clear cut case of looters versus producers)
"The economic reality is that American companies use this approach to acquire market share overseas. The alternative is losing the business to foreign competitors.
The truth is that when firms expand their operations abroad, taking advantage of the lower foreign tax rates, it helps their workers in the U.S. Higher sales abroad (surprise, surprise) are good for domestic workers."
Hassett contends that if the Obama tax change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations....the firms that stay in the U.S. will be at such a huge tax disadvantage that they will absolutely need a “rescue.” (and therefore be at the further mercy of government [mis]management and micro-management)

It is bad enough that we have Chrysler and GM co-mingled with government such that corporate bond holders are being told to pound sand during buyouts and bailouts. We better hope that the courts do their job to protect the rights of creditors and do not resort to the acceptance of allowing companies to tear up contracts "in the interest of employees or jobs". Who in their right mind would ever want to loan American businesses money if this precedent is set? If you loan money to a corporation you want to have some sort of standing and security and collateral promised to you if the loan is defaulted. No other business deal should be allowed to wash away your standing and stake in a company after you have loaned money to the business, especially without your consent in the deal. yet, this is what is going on now!

Obama's plans sort of puts a new spin to the phrase "Capital Punishment"