If the "repatriation holiday" is DIRECTLY tied to domestic hiring, I am all for it. That being said, such ties would be against the political interests of the GOP, so I doubt they would support such constraints.
someone needs to slap this upside the next republican's head that argues lower tax will generate investment. its the most dishonest argument out there.
So if $500,000,000,000 is brought by companies from overseas then they pay $25 billion in taxes. Then if half of that money is paid out in dividends around $250 billion which is taxed at ordinary income rates (or deferred in qualified accounts) at an average of 25% so around $60 billion in taxes. If the rest is used for stock buybacks then the value of shares will increase by that respective amount in an efficient market and in the long run the shares will be sold for capital gains (Long (15% top) or short (ordinary income) or an average of 25% lets say so another $60 billion in eventual taxes. Then you have excess cash in the form of dividents or gains from stock net of taxes of around $480 billion dollars that needs to be reinvested someplace else giving cash to another company that may use that capital to invest, create jobs or wealth. Or the people that recieved those gains may go spend money on dinner, a car, a home, or hire someone in their own business and create a strong multiplier effect throughout the economy. So we're saying no to potentially $145 billion in taxes, plus around $480 billion of gains that will be spent or reinvested in the economy. Better than QE3 in my humble opinion.
when you get a break from your ivory tower - can you break down the multipliers on that for those of us who don't deal with macro and are busy running businesses?
These companies already have record-setting profits and cash on hand. They aren't spending it because they have no reason to - they can fill all their demand without expansion. If they aren't spending their record-levels of cash now, what makes you think they will do so when they just get even more cash?
GE CEO dude was on 60 Minutes last night. good interview. they have been recently opening some factories in the good ole usofa but when asked quite directly if he had a civic duty to creat jobs here, he said his responsibility was to shareholders.
Its taught for good reason - that is who his #1 responsibility is to. Of courses the bigger picture they also point out is that often times being a good corporate citizen, caring about all your stakeholders is very good for business as well - it doesn't mean its mutually exclusive. But at the end of the day, if I'm a shareholder, I want the company doing what is in the best interests of the shareholder, not for City X where the factory is located.
Then you have a narrow way of looking at it. City X is what protects your factory from fire, crime, allows the zoning which allows your factory to be there, repairs roads that your factory workers use to get to work, and delivery trucks use to haul your merchandise. Add to that all the Federally maintained highways used as well as the post office, etc. That company owes a great deal to both the Federal govt. and to City X
Of course the company owes a great deal to them. But that is what taxes are for - no where did I say don't tax the business, whether its property tax by the city or income tax by the federal government. This just means a company shouldn't be faulted because its trying to serve its shareholders first.
I disagree. I personally take a far more holistic view of a company's stakeholders than just shareholders. Shareholder value is created (and destroyed) because of the actions of stakeholders other than shareholders more often than not. Bad press from shutting down a factory and moving it to Mexico can torch shareholder value, as can lawsuits, EPA actions, and layoffs. When you look at the whole picture, shareholder value is directly affected by the interaction between a corporation and its employees, the government, special interest groups, residents of the locations where the corporation operates, and other external stakeholders. It is in a corporation's best interest to look out for all stakeholders, but the old guard in corporate management hasn't caught up yet. To be fair, I have had a lot more focus on these issues in my MBA program than I expected, but it will take a while for those ideas to become truly incorporated into the C-level of most corporations today.
This is all true - but you're not disagreeing with the original statement. As you point out, the purpose of your holistic view is not just to be good, but to create value for shareholders. The original statement is just that shareholders' value is the top priority. You're just saying that the way to protect shareholders' value is to be a good corporate citizen, etc. As far as that being accurate or not, it depends. In some cases, it's certainly true. But a corporation's interests are not always going to align the community's. That's a case-by-case thing. GM was a great corporate citizen, paying really high wages and providing lots of health care. As a result, they ran themselves into bankruptcy, which hurt everyone.
I think GM's problems weren't just that they paid high wages and provided health care. They also made crappy cars. I agree though that shareholders interest won't always align with community interests which is why there is a role for government regulation to play.
For the most part, in 2009 and 2010, they made the same cars they made in 2007 and 2008, but they pretty profitable even in the midst of a recession in 2009 and 2010. Their problem was entirely one of competitiveness on the expense side - they had problems with both pay and too much labor that they couldn't get rid of. Those crappy cars are fine if they can be sold at a lower price or at higher margins.
absolutely, they had to decrease their liabilities to retirees and decrease their benefits expenses. better car design and eliminating some models did help though
It has to end that corporations are fleecing us, giving the jobs to foreigners, and taking their profits and keeping them offshore so that it serves as a net drain on the economy. The occupy wall street is a reaction to continual fleecing of the middle class. It won't stop...even if this movement fades, another and another will keep coming. The more people get fleeced, the more they will act to take things back.
True in the last 5 years they have improved their quality but prior to that their quality had been sliding for years. Foreign car makers grabbed US market share not just because they were cheaper, in many cases US cars like Pintos, Chevettes K-Cars and etc were cheaper than foreign equivalents, but because US quality had gotten very poor. GM had a lot of problems but I don't think it is accurate to lay all of the blame for their problems on employee compensation.
But their problems weren't really about market share - they were about margins. Even if their quality was higher, their margins were far lower than Toyota, Honda, etc - meaning that those companies would still have the edge. There's always a market for lower quality cars - the problem wasn't that GM was selling those. It was that they were having to price them similar to high quality cars because of their costs. Ultimately, to produce the exact same line of cars cost GM far more than it did its competitors. That was the inherent problem for GM.
