Tech Companies Blast Obama Tax Plan
I’m a shocked, just shocked, that technology companies would be against Obama’s foreign profits tax.
Oh wait, no I’m not.
A group of technology heavyweights, including chiefs of IBM (IBM.N) and Motorola Inc (MOT.N) enlisted a former Clinton administration economist to beat back President Barack Obama’s plan to boost some taxes on overseas profits.
The Technology CEO Council recruited Robert J. Shapiro, a former top Commerce Department official, who wrote a report released on Monday arguing that significant jobs losses could occur under Obama’s plan.
I’m not exactly surprised that IBM has a beef with this new tax. First off IBM stands for International Business Machines so they’re a international company. Second they have two subsidiaries in foreign countries. They own ILOG which is based in France and Telelogic which is based in Sweden. If Obama’s foreign profits tax passes than IBM would have to pay U.S. income tax on the profits of those two companies.
While that change won’t be felt much in IBM’s ILOG company (France’s corporate tax rate is 35%, the U.S. is at 39.3%), they’ll certainly feel it with Telelogic. Sweden’s corporate tax rate is 28%.
Once again the technology sector is screaming at Obama to understand their point of view. This is a huge sign. First it was Microsoft, the largest technology corporation in the world, now it’s IBM and Motorola.
Again I will ask, what is stopping IBM and Motorola from picking up their corporate headquarters and moving to another country? Not much, they’re not bound here by natural resources or human resources.
–jb
wayne on June 8th, 2009
Taxes should be as low as possible while maintaining high productivity growth (which does require some government coordination and initiative).
This does not look to be a policy which supports the above statement.