Tax breaks and WTO

[Max B. Sawicky]

There are cases where tax credits can result in net
negative rates of taxation, and thus can turn investments
with zero or negative returns into positive ones.  Some
1981 tax changes created situations like this, though
these were subsequently reversed.

But this could all be academic if taxation of corporations
at source (i.e., the U.s. corporate income tax) is junked
altogether and replaced with the VAT.

The VAT is entirely "GATT-legal." It is widely held to
be regressive.  It is also said to imply a zero rate of
tax on capital, since all investment is deductible in
the year of expenditure.

I have a paper arguing against the conventional view,
but unfortunately it's buried in another, much longer
paper.  Needs radical editorial surgery.

mbs


>>>>>>>>>>>>>>>>>>>>>>>>>>>

If this is the case regarding the foreign sales corporations, the amount is
much bigger than 2.5billion$

Ian


> -----Original Message-----
> From: owner-lbo-talk at lists.panix.com
> [mailto:owner-lbo-talk at lists.panix.com]On Behalf Of Marta Russell
> Sent: Thursday, December 30, 1999 3:23 PM
> To: lbo-talk at lists.panix.com
> Subject: Tax breaks and WTO
>
>
> This may be the one and only progressive thing the WTO has
> done.
> Of course Spotlight woud complain.
>
> "The United States has appealed a ruling by the World Trade
> Organization
> that condemed the $2.5 billion in tax breaks for US.
> companies with
> overseas subsidiaries as being illegal subsidies.  According
> to the UPI,
> if the United States loses the appeal, "one outcome could be
> the loss of
> a naton's control over its own domestic tax statutes."
> (Spotlight 12-99)
> --
> Marta Russell
>
>