Corona Virus, How Has It Affected Your Area So Far?

Popular leftist misconception is how the tax system used to work. There was a huge tax rate that nobody paid because there were a bazillion ways around it, just like now. Only back then the tax write offs were scattered and non-uniform. Senators from various states would get huge write offs put into laws for industries their state specialized in, with how big the US was that resulted in virtually every industry having some sort of individualized tax reduction mechanism, none of them involved workers. If anything some of the worst offenders were the unions who got themselves exempted from taxes by declaring themselves a "charitable organization". In the early to mid 50's the 501c got created which standardized the non-profit world.

https://www.irs.gov/pub/irs-soi/tehistory.pdf

Overtime the tax system has become more codified and standardized not less, before it was hodgepodge wild west, now it's quite hard to get away with tax evasion. Nowadays the best method for reducing tax liabilities is to buy a company in a foreign country that's friendly to your industry and become a multi-national corporation. The moment that happens you can move revenue overseas, declare it as part of the income of the foreign company and legally tell the US tax man to go to hell.

This isn't a video game, there is no console where you can click "raise tax" or "enforce tax" and get some sort of income bonus by "sticking it to the evil corporations". There is no bonus points for "elevating the economy to enlightened communism". In the real world supply and demand rule everything with an iron fist and are only slightly less absolute then gravity. The cost of labor, which is what people are paid for their time / energy / care / whatever, is based on the supply of that labor compared to it's demand. "Living wage" in a free market is a fantasy and is just another term for "government coupons". If there is an oversupply of young millennial liberal arts majors who were raised by helicopter parents and participation trophies, and low demand for those same liberal arts majors, then their pay is going to be rock bottom. If they attempt to get Comrade Government to enforce higher pay, then they will be dismissed and those jobs turned into automation or simply deemed not profitable to fill.

Actually, 1950s tax law allows any and all deductions under the sun.

Got credit card payments? You can deduct the interest payments.
Want to go to Hawaii for vacation? Throw in a meeting and you can deduct the entire trip (including your family's portion of the expenses) as a business deduction.
Car payments or purchases? You can deduct the entire amount on your personal taxes.
Home repairs? All completely deductable.

The top tax rate may have been 91%, but the actual taxes paid were significantly lower than what is being paid now (and that's without capital gains tax included too in today's standards).

Not exactly. Multi-national corporations and foreign corporations are required to pay taxes on US income (less deductions from US sources) through a convoluted system that, in all honesty, doesn't make sense to anyone.

First you start by reporting your worldwide income and expenses, then you subtract foreign taxes paid, then add foreign deductions, and then subtract foreign income.

If the US code would take Texas Franchise Tax calculations into consideration (well, Texas Franchise Tax income calculations, don't copy the deductions portion!), then it would be much easier to figure out and pay US taxes that way.

It happens to salaried workers in the tech industry regularly. 80+ hours / week and that great salary starts to look like McDonald's hourly wages without the benefit of overtime.

Ah but if you attribute that revenue to the foreign subsidiary and keep it there, it never becomes US income.

The most famous system, which was replaced.

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

It's why top holding companies like Alphabet exist, they don't directly sell anything and instead merely own subsidiaries. As long as the income isn't "made in the USA", then it's not subject to US tax laws, and that gets kinda weird when your profit is either intangible (internet stuff) or sold by a foreign company.

Now I'm gonna make a company, Saevel-Corp and Saevel-Corp owns three subsidiaries, Nobody-Corp in the Philippines, NoWhere-Corp in Taiwan, and NoPlace-Corp in Virginia. Now I have US based employees of NoPlace-Corp designing my products, those designs are then transferred to Nobody-Corp that owns production of them and then transfers the merchandise to Nowhere-Corp to sell internationally. Now Saevel-Corp has licensed it's brand name to Nobody-Corp to put on the products with just a tiny little sticker that says "Made in the Philippines" at the bottom that indicates it's not directly made / sold by Saevel-Corp.

Now NoPlace-Corp has to pay US taxes for any income it makes, but since it's transferring the results of it's work "at-cost" to another subsidiary it's "profit" is virtually zero. Payroll taxes and so forth obviously have to be paid (another reason to reincorporate them in India), but there is no income attributed to the US based entity. Nobody-Corp has to pay taxes in the Philippines, but again it's transferring it's product to "at-cost" to NoWhere-Corp in Taiwan to actually be sold. NoWhere-Corp is the one selling the product globally and is the one receiving the income as foreign income, that income stays in Taiwan though. Remember along this whole line I've transferred everyone "at-cost", meaning the only money flowing back up is the bare minimum required to cover costs. Everyone is at a net zero except the Taiwan company who is keeping the proceeds and paying taxes to Taiwan. This is not recorded as US income until it gets transferred to Saevel-Corp, which would be only the absolute minimum required to run business. Since this is all under an umbrella Corporation that's listed on the stock exchange, the whole thing gets treated like one giant company who's value is the sum total of all it's holdings, including foreign earned income.


That's basically how every multi-national IT company works across the globe. The company only appears to be US because they let the other segments use their brand logo. The above was a very simple solution, normally they have a dozen smaller companies located in different parts of the world and shift costs between them. This is all to prevent as much revenue was possible for returning to high tax countries. Of course that also really hurts hiring in those countries as that's just more tax that needs to be paid. None of this is illegal either, because the companies are reporting their income, they aren't hiding it at all. Their just reporting it to the country they like the most. The US can't go into Japan and order Honda to pay the USA taxes on it's corporate profits. The US could order Honda USA to pay taxes on its' profits, but since costs were transferred Honda USA ended up with near zero profit.

A) The average tech worker in San Francisco is $145k/year.
B) Although it's not studied, it has been reported that people working at the major tech industries average around 45 hours a week.

Take those two together ($145,000/((2080/40)*45)) and the average tech worker makes $61.97/hour. That's not McDonalds hourly wages.

Side note: 2080 is the number of hours worked a year for a 40 hour/week job.

Transfer pricing, the backbone of multi-nationals.

https://corporatefinanceinstitute.com/resources/knowledge/economics/transfer-pricing/

The funny part is that this is an option only available to large corporations with lots of money to afford paying all those accountants and lawyers required to keep this stuff legal. Because every country involved has different rules and regulations, you need expertise in each country. For large multi-billion USD companies it's totally worth it, for smaller multi-million USD companies it's not. It effectively works as a tax benefit only for large corporations, and this system grew out of greedy liberals desperate desire to use Comrade Government to take money from "wealthy companies" and put in their own pockets.

That lies the rub, and why Google has a lobby office directly across the street from Congress (literally).

There's loopholes specially made in the law for Google and other tech companies that, believe it or not, is sponsored/written by prominent statesmen. Not on one side of the aisle either, both are equally guilty of sponsoring/writing legislation for this.

But the way the tax law is codified, most multinational corporations have to report worldwide income and expenses, then subtract foreign income and expenses after foreign taxes are taken out. That's Schedule F of Form 1120.

Edit: you are specifically following one industry, which, like you said, doesn't produce tangible products. Those industries that produce tangible products but are multi-national corporations are the ones I'm talking about mainly.

Yeah, what I wanted to convey was that science is a process (which is a human endeavor) rather than some self-evident truth


A lot of times it isn't.

Oh you would be surprised

There can be different conclusions based on the same data too, because it's not a simple input -> output automated script.

P.S. I'm just talking about the general concept of science, I have no intention of participating in this "WHO is guilty" discussion because it's all conjecture (unwarranted too imo) at this point. It is plausible that other factors influence their recommendations (heck, that can happen in the very process of doing science or publishing results), but it's expected in a matter of this scale & does not necessarily signal ill intent. That is unsubstantiated.

You guys need to realize, the data is still evolving. You can't honestly look at the data until after everything settles, because the data in real time changes...in real time.

Before we can determine the effectiveness of one government's policies over another, we have to survive the pandemic first!

Actual tech workers do not work 80 hours per week, not for long anyway. Occasionally you need to put in insane hours during a sprint to meet a deadline, but then afterward the requirements go down dramatically as the effort is shifted to another department. Now those poor H1B's that are farmed out from India, those *** gotta work their butts off to make well under the average pay for their product. Why do we think all those tech companies keep demanding more H1B's when there are plenty of IT graduates available in the US? It's far cheaper to pay a low salary to someone from India / Pakistan and plus up their title then to pay for an equivalent person in the USA.

Now here's the secret sauce, if your getting paid for your time then your doing IT wrong. The goal is to be paid for your knowledge and skill, which needs to be maintained such that it's always in high demand and thus has a high cost attached to it.

Law of Supply and Demand is universal and nearly as absolute as Gravity. People either learn to work with it or get steamrolled by it.

You're right that someone should be paid their worth due to their skills required. But minimum wage in the developed world means you can afford all essentials a person needs to survive. If you think I'm advocating for lawyers and cashiers to make the same amount of money then you using some serious Late Stage Capitalism logic. If minimum wage were to increase to livable wage but suddenly a highly skilled job like paramedic would be making the same then the paramedics would need a pay increase by default.

I also want know when is a single parent working 2 full time jobs to support their kids is supposed to 'make themselves more valuable'? Especially now that every daycare is closed so there is no one to watch their kids. Or is their stress and burnout punishment for 'poor decisions' as kids?

Here's the catch: Minimum wage isn't designed for living wages. Minimum wage jobs are there for people to build their career paths from, starter jobs for the unskilled/high-school educated people. As you grow up, you are supposed to earn more by becoming valuable with skill and experience.

Anyone who sticks with a minimum wage job their entire lives cannot complain that they don't have any money. They refused to become experienced and worthwhile. You cannot improve in lethargy.

You are talking about a minority of people out there. A single parent most of the time has family nearby to look after their kids, even in this crisis. Those who don't are rare and few between.

And there isn't many people with 2 "full-time" jobs. Most people in your mindset generally have part-time jobs, and with the economy as robust as it is, would have found themselves able to support themselves with only 1 full-time job, because even the "minimum wage" jobs are paying well over minimum wage currently. In some cases as much as $12/hour starting.

The only real time you would find a person with multiple minimum wage jobs is when times are bad, and even then, it's a stopgap until they are able to get work in their old industry again.

The majority of Americans do not work multiple minimum wage jobs. And a majority of Americans only work 1 job, and it's not minimum wage.

Minimum wage increases do not help the worker, they never had. It just puts more people in poverty because it increases the poverty line up to those who used to work greater than minimum wage due to their experience.

Not sure if obtuse or purposefully ignorant. We already discussed this before.

Except nearly all jobs do not have 60 hours a week workweeks, and those who do on occasion are seasonal/projects. And those people who do work 60 hours a week on occasion are paid salaries and make more money for that.

That's because your country doesn't define overtime. And it's basically up to your contract what overtime is defined as.

But there's limits on how many hours you can legally work in the UK (it's 48 hours averaged over 17 week period, meaning you can't work over 48 hours legally, with or without overtime). While in the US the law states that if you are paid hourly (and in some cases salaried), you are paid overtime automatically if you work more than 40 hours a week. Overtime is calculated as time and a half.

Well I know one industry very well and want to stay within the realm of my expertise. The concept though should work with anyone because Transfer Pricing is a thing. The majority of multi-nationals aren't headquartered in the USA, they are in Denmark or some other tax-nice country. Then the US company is merely a subsidiary where virtually none of the profits go to. The US IT companies got some of those rules made to be allowed to do what the other multi-nationals were already doing. It was that or move headquarters to another country, which some of them did anyway. One sided FTA's really make this all possible.

Honda USA does not report Honda Japan's global income to the USA, nor are they required to. BMW isn't required to report it's income to the USA. A Chinese rice farmer isn't required to report their income to the USA either. All three are in the same situation, they are foreign business entities. In the case of Honda and BMW they have a US based subsidiary who represents them but doesn't actually sell cars (seriously they don't). Instead they franchise to local auto-dealers and price transfer it all the way back to the foreign corporation. So that $50K BMW costs the dealership 46~48K (seriously their margins are that low) from BMW USA who gets it at the same price from BMW international who is owned by BMW Group in Germany.

The profit from selling that $50K BMW in Texas goes to BMW Group who then reports it to Germany and pays taxes to Germany. The only profit that stays in the USA is the small amount the Texas BMW Dealership gets off their slice.

We see this pattern with all multi-nationals because we now live in a global economy. After all we don't see France coming into the USA and demanding GM Renaissance Center (that's the umbrella company for GMC) pay taxes on it's global corporate profits. Russia doesn't get to do that, China doesn't get to do that, neither does the UK, Sweden or Zimbabwe.

And this is all perfectly legal. Nobody is lying, nobody is cheating, nobody is hiding money from the IRS. A Chinese company selling pens isn't going to pay corporate income tax to the USA, it's going to pay that tax to China instead. That is what import tarries are for, which we have woefully demonized even though everyone else is using something similar.

That's because the income is reported at the franchise level and not the corporate level. Any vehicles manufactured in the US is reported as income, but those companies, while owned by foreign nationals, only file taxes for that subsidiary alone.

But multi-nationals who are based in the US (Walmart is one) are supposed to report all worldwide income, then subtract foreign income/expenses in a special form. There are more multi-national companies who's home offices are in the US than you think.

Of course, that's the point of politics. It's meant to be subtle and true intentions are always hidden.

https://en.m.wikipedia.org/wiki/Tedros_Adhanom

This guys previous job was Ministry of Foreign Affairs (Ethiopia). He IS a politician and WHO IS politics. No there won't be an "evidence" to support that because politics isn't about evidence, it's about the big picture and reaching goals.

I wouldn't use "ill intent" to describe political goals. But I highly doubt WHO does not involve in politics.


Yup, we can all wait until everything is over to debate the effectiveness of policies....oh wait. By the time everything is over, the less effective way already cost lives and economy.

The ones that are successful don't "wait" for data. They just do it before the data came out. Being a step ahead of everyone else is key.

Who the hell told you that? Whomever it was lied to you.

It's not possible for any minimum wage to cover the costs of the "essentials". The higher you push minimum wage, the higher the costs of those "essentials" goes. If the "essentials" are $24K per year but there is a US minimum wage of $15,080 per year ($7.25 per hour). Now you force the minimum wage to $11.53 per hour to hit that $24K mark. Suddenly you see prices go up, especially rent / housing, and now the "essentials" are $34K per year. In a fit the righteous Democratic People's Party decides to forge those evil capitalist companies to pay $16.34 per hour as a "living wage". And again the cost of living, especially that rent / housing, jump to $43K per year. Simultaneously you see people losing jobs left and right and going on government welfare programs until eventually over half the country is on welfare. The divinely righteous Democratic People's Party, having finally vanquished the greedy capitalists and now have complete control over the government, decide the only way to stop this evil greedy corporations is to take them over and run them for the good of the people.

Then we get Venezuela food lines.



Anyhow this is getting off topic.

The current situation is gonna force a lot of companies to get lean or go broke. Those multinationals will be fine because they can draw on their overseas reserves to maintain them. Since they will be running a negative for income, any money they transfer in just makes the negative smaller.

You forget that those multinationals are getting hit multiple times.

While they are hurting in the US, they are also hurting just as bad or worse in other countries they are in. So, in aggregate, they are faring far worse than local domestic companies are.

Will they go bankrupt? Probably not, but they may end up pulling out of countries outright, especially startups and/or low-preforming countries. But in an overall standpoint, they are doing far worse than non-multinational corporations, because their spread is much farther than the US, who is doing better than nearly the rest of the world.

I agree. In the US, right now, the mortality rate is 35% on closed cases. However, that number will change. Hopefully, it becomes much smaller.

You misunderstood. I'm saying wait until the data comes out before we determine the effectiveness of a policy. You are talking about the policies themselves, I'm talking about how effective it was.

Neither you nor I are in control over a country's effectiveness. All we are are armchair analysts. With biased viewpoints too!

That is the rub now isn't it. How much is manufactured in the US vs another nation? Income that's already been taxed isn't taxed again remember, if I price transfer my income to my Taiwan company and it pays 10% Taiwanese tax on that income, it doesn't need to also pay the 35% US tax.

Now if a company is HQ'd in the US, manufactures in the US and sells in the US, then there is zero chance of it avoiding paying US taxes. If it's HQ'd in the Netherlands but still manufactures and sells in the USA, then it's going to be hard to price transfer. But if it manufactures in China, HQ'd in Netherlands and sells globally, then it's all but impossible to force them to pay US taxes. I mean what exactly is the IRS gonna do? Get on a place, fly to the Netherlands and arrest their dutch CEO? Try to send nasty fines and bills to their Netherlands headquarters? I mean even if the holding company is based on the US, all the economic leadership and accounting is done overseas, again what is the IRS going to do? Violate international treaties by flying off to another country after some accountants?

Saevel-Corp made $2 million USD in net profits upon which it paid the IRS taxes for.

Noplace-Corp actually lost $5 million USD that year, which is in line with it's normal costs but was transferred money from it's parent Saevel-Corp to cover the loss. The BoD at Saevel-Corp is seriously considering moving this company to India to lower this expense.

NoBody-Corp made a measly 500K USD in net profits upon which is paid taxes to the Philippines.

NoWhere-Corp made $50 million USD that year, and it paid the Taiwan government taxes on that. The remaining balance is kept in a bank account in Taiwan.

The total profits where 47.5 Million of which the entirety was taxed in their respective countries. The lions share of that money will stay outside the USA as cash reserve until Saevel-Corp needs to expand or capitalize a project, upon which it will be transferred to the business unit that needs it as a cash infusion.

The US IRS can not go after NoWhere-Corp, it's a Taiwanese company with a Taiwanese CEO. It could try to go after Saevel-Corp but then nothing was hidden and there is no evasion taken place. The IRS knows about all the money but since it's a foreign country's jurisdiction and none of the capital was repatriated there is nothing to go after. Now if Saevel-Corp wants to pay dividends on profit, then its going to have to transfer that money from NoWhere-Corp as profit and that's going to trigger having to pay Capital Gains tax on disbursement.

This isn't illegal, it's a common practice.

https://money.cnn.com/2017/02/01/investing/apple-cash-overseas/

Apple had over $240 Billion USD in overseas accounts using this exact practice. Last year they brought a lot of that back and had to pay $38 Billion in taxes to the IRS. They used the money for expansion in the US.

Again nobody is hiding money, it's all getting reported to the required authorities.

That's what I'm talking about, they will still exist after this is over with. As compared to small and medium sized business's inside the USA that live quarter to quarter.

Show your evidence to your assertion. I already showed mine.

You cannot pass off opinion as fact, no matter how much you wish for it to be.

Yes, but they will not exist at the level it used to exist at.

A multinational that was in 5 countries may all of the sudden find itself in only 3 after everything is said and done.

Anyone got their paycheck from Trump yet?

Business is picking up since Monday. People have money and they want their cakes. We have been selling a bit more than usual. Considering re-hiring some people.

I hope this thing last. Maybe they can give out money every month \\(c_c)//

Trump wants to reopen the economy. They don't want the cure to be worse than the disease.

Has anybody consider that the disease will blow up on their faces because they only get half the cure? Then they will have to take a tougher, more damaging and potentially fatal cure to get rid of the renewed and drug resistant disease? Like Tuberculosis?

Sold all my stock positions on Monday, anticipating the hit once Q1 is in. Anyone managed to fiddle with their portfolio?

New York CITY, New York Is the "capital of the world"

New York discounting that area specifically looks "normal"

Also further in it's curve. "first" etc. Most testing.