Need evidence re: tax incentives for moving production overseas.

[tekriter]

I seem to remember reading something a couple of years ago that not only was the movement of production outside the U.S. going to be tolerated, but that companies could use tax breaks to make it even more profitable.

Anybody else remember this?

And yes, I'm trying to rebut a freeper with a serious case of "it's Clinton's fault".

Thanks!

[auburnblu]

1. Not sure its Clinton's fault

What happens is that companies will primarily move production overseas to say China because labor is cheaper. However, often the tax rates where the production, or it could be something like R&D research, is moved to is actually lower than the U.S. The subsidiary in the other country would then perform the manufacturing activity and sell the production instead of the parent company in the U.S. doing so. If the tax structure is set-up right, the U.S. subsidiary is taxed initially at the other country's rate. The parent company won't pay any tax in the U.S. until money is distributed/sent to the U.S. parent. If the subsidiary holds the cash, they can help the parent defer paying taxes. Its more of a timing issue than anything.

And no its not Clinton's fault more than anyone else's, though I didn't remember him actively seeking to change the rules on this. W hasn't either. A lot of R&D work is done in Ireland, because their tax rates are much lower.