Obama to go after offshore corporate cash for taxation

In this November 2014 post entitled "Desperate government will now go after big corporations" I noted that the IRS was sniffing around MSFT and predicted that Obama would soon turn on the corporations with the easiest targets being the taxation of offshore profits.  

And so now Obama is starting to leak more details of his plans to wring more government revenue out of the corporations.  Given the level of government desperation these days, the old game of "amnesty repatriation" is not going to cut it. 

• That is my term to what past governments did - they allowed repatriation at ultra-low, token rates such as 3% or 5%.  While the government would not make a lot of money in this deal, at least the money could come home and be spent into the US economy instead of sitting on the balance sheet of a foreign shell company or being re-invested into some foreign economy.
• Clinton recently suggested another form of corporate extortion whereby corporations would not be taxed on their repatriated profits if they "voluntarily" used 10% of said profits to buy "infrastructure bonds".  So the government would get their money and the corporations could list government IOUs yielding nearly zero percent on their books thus allowing it to not appear as an immediate loss thus enabling corporate CEOs to collect their outsized bonuses (which is all that really matters to most of them).

Obama is a bit greedier it seems and, due to widespread ignorance by the public coupled with the ease of vilification of just about anyone or anything when the herd is in a sour mood, the public is likely going to back him up on this.  In other words, for the very reasons I stated in November, corporations better go "condition red, shields up" with respect to the government because Obama is a Klingon and he's lining up for attack.

It's a shame that so few understand the game government plays and an even bigger shame that even fewer understand real economics.  When Obama tells people he's going after the greedy corporations so that the people can have more stuff, he pitches it all as "free stuff".  Unfortunately the moron public still believes this fraking con man despite the number of outright lies he has told.  I mean, at what point do you stop listening to even one word that comes drooling of the liar in chief"s pie hole?  The guy is incapable of speaking any truth.

So here is the truth of it:  Any money, and I mean any money at all, that is given to or stolen by government from the people will be wasted.  Some of it will be wasted outright as in waste, fraud and abuse.  But most of it will simply be wasted on things that are either administered poorly (Obamacare website, anyone?) or inefficiently relative to what a private corporation would do.  This is true because government has no budget concerns and no profit motive to worry about where as these are major concerns for private corporations.  These feedback mechanisms are what keep private corporations honest (if anything can be said to do that).

The government should be cutting back on spending given our massive debt but that never happens until ALL the players have been screwed.  Until then, government simply grows and gets more powerful and demands more tribute to Caesar every year until Caesar gets dealt with by the public which finally gets wise.  Corporations are not going to lose money just for the privilege of providing us Cheerios and Corn Flakes.  If their input costs go up, their prices have to rise.  Any money that Obama extorts from corporations is going to end up as higher prices at the store, period.  This is just more backdoor taxation of economically ignorant citizens.

In any case, it seems that Obama isn't going to be happy with any of the previous solutions to raising revenue. No, just bringing that money home to the US so that it keeps our economy afloat is no longer good enough.  He wants 14% on past profits and 19% on future profits.  The "amnesty" here is a 5% reduction on his new normal rate of 19%.


"One prominent feature is that it would be mandatory. Instead of relying on ultralow tax rates to induce companies to bring their money home voluntarily, as some lawmakers have recently proposed, President Barack Obama wants to impose a 14% tax on those profits. He also would tax future foreign profits at 19%—far lower than his proposed 28% top rate for corporate profits and the existing 35% top rate, but still significant given the direction many other developed countries have taken.".

This is going into law folks.  The Dems want it and the GOPs need it.  Watch and see, the GOPs who are supposed to be pro-corporations will be notably silent on this one.  The American middle class is on the ropes and they all know it.  Since this is going to be retroactive, all of the big multinational corporations are going to get hit with a big and probably multi-year tax bill that they have not accounted for and have not planned for.  They will either have to restate past earnings downward or they will have to take a massive hit sometime in 2015 to account for it.  Of course, all of this comes as the likes of IBM and McDonald's are already sliding over the edge.  Mickey D's has shown declining top line for several quarters now with Q4 2014 being described as "dismal".

This is just the beginning.  Within 12-18 months there will be obvious capital controls and then ultimately price controls and then shortly thereafter product shortages.  In that order.  I see it starting to unfold in 2016 and getting a lot worse in 2017.

This is how deflation is taking care of the corrupt good old boy system.  The organized crime syndicate known as the military industrial complex is going to start eating its own.  I predicted this would be the case years ago because that's how criminal organizations always eventually fall.  It's not being done by choice but rather because they run out of Marks and Patsies to fleece and then they find there is not enough easy money to go around anymore so they begin infighting.