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US Politics: Rural Southernification… (thanks Zorral)


Ser Scot A Ellison

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49 minutes ago, Kaligator said:

And like it or not, the public will see Biden spending a lot of political capital on this and getting nothing. They'll see his talk about bipartisanship and see nothing comes out of it. Mostly, they'll see him not deliver something he said he would. There isn't a lot of nuance there - there's simply him saying that he'd do something,  and not getting it done. And that hurts Biden.

The AHCA was never that popular with the public. Both pieces of legislation are. So as long as people place the blame where it belongs (Manchin) Biden's numbers will probably not suffer as much. Ofc, it'd be infinitely preferable for him to get those pieces of legislation through, but that's really down Manchin.

Uff, just checked Sinema not up for reelection until 2024?

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3 minutes ago, Mlle. Zabzie said:

That goes to intangible property and transfer pricing.  Historically we have accepted that profits can attach to an “entrepreneur” that owns intellectual property.  In a digital world that is kind of nonsense.  Some jurisdictions have imposed digital services taxes. That’s not necessarily the right answer either.  

Agreed to your last sentence. It’s nothing more than a band aid. The „simple“ solution would be: pay the taxes where you make the revenue and generate the profit. For example Germany is Amazons second biggest market (after the US) with 30 billion USD revenue but they pay their corporate taxes in Luxembourg. And they are just one of scores of multinational corps doing the exact same thing. 

The truth is: each of our national taxation systems are simply not fit for the global corporate world of 2021. And the same goes for private tax evasion. Malta is another Hotspot (many closed ship funds there). 

It’s a complicated matter I am aware but the status is not acceptable. 

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Is this the contemporary Fort Sumter?

https://www.wsj.com/articles/biden-administration-prepares-to-sue-texas-over-abortion-law-11631151641

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Biden Administration Prepares to Sue Texas Over Abortion Law
Lawsuit challenging restrictions limiting procedure to first six weeks of pregnancy set to be filed in coming days


 

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1 hour ago, Kaligator said:

McCarthy cannot do that; only Pelosi can bring it to the floor. 

Wasn't the deal with the moderate House Democrats earlier that she would bring the bipartisan bill to the floor no later than the end of September in exchange for them agreeing to move forward with the reconciliation bill?

31 minutes ago, A Horse Named Stranger said:

So as long as people place the blame where it belongs (Manchin) Biden's numbers will probably not suffer as much. Ofc, it'd be infinitely preferable for him to get those pieces of legislation through, but that's really down Manchin.

The blame game is always difficult to predict. Manchin personally will probably be OK no matter what because his constituents (i.e. the people of West Virginia) are overwhelmingly Republican (Trump got more than 68% of the vote there in 2020) so he has options.

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10 minutes ago, Altherion said:

Wasn't the deal with the moderate House Democrats earlier that she would bring the bipartisan bill to the floor no later than the end of September in exchange for them agreeing to move forward with the reconciliation bill?

Yep. She can go back on that, but that would create a new set of problems. It would be interesting if she brings it to the floor, the progressives walk and Republicans vote for it to seriously mess up negotiations over the reconciliation bill if it’s not hammered out by then.

 

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53 minutes ago, Arakan said:

Agreed to your last sentence. It’s nothing more than a band aid. The „simple“ solution would be: pay the taxes where you make the revenue and generate the profit. For example Germany is Amazons second biggest market (after the US) with 30 billion USD revenue but they pay their corporate taxes in Luxembourg. And they are just one of scores of multinational corps doing the exact same thing. 

The truth is: each of our national taxation systems are simply not fit for the global corporate world of 2021. And the same goes for private tax evasion. Malta is another Hotspot (many closed ship funds there). 

It’s a complicated matter I am aware but the status is not acceptable. 

Well, that is not quite right.  Amazon probably would tell you that they make their EMEA profit in Luxembourg.*  Luxembourg has a very beneficial “patent box” that provides incentives for companies to move their IP to Luxembourg (so does the UK, the Netherlands and Ireland, for instance).  The IP rights for use in each country in Europe are presumably legally owned by a Luxembourg subsidiary, and the subsidiaries in those countries pay a royalty (presumably deductible in the home country, and without withholding tax, because all payments are within the EU, assuming there is sufficient “substance” in Luxembourg under applicable third country law).   That erodes the “base” in the relevant countries.  What you could do is what Germany, France and Italy (I think - may be misremembering the jurisdictions) have done, which is to threaten a digital services tax based on end-users.  You could also create a “permanent establishment” based on registration of IP (but that is more radical), or you could impose royalty taxes on all payments of royalties to havens (Germany, I believe, is going this direction, but there are issues with the Luxembourg/Ireland/Netherlands because of EU).  Anyhow, this is the #1 topic at the OECD, and in fact if you talk to any global multinational, these issues and the related transfer pricing issues, are their #1 audit issue in every jurisdiction (and often their only audit issue).  So it’s not like slipping under the radar or anything.

 

*I do not, and never have represented Amazon. I am familiar with global IP and supply chain structures, however.

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2 hours ago, A Horse Named Stranger said:

The AHCA was never that popular with the public. Both pieces of legislation are. So as long as people place the blame where it belongs (Manchin) Biden's numbers will probably not suffer as much. Ofc, it'd be infinitely preferable for him to get those pieces of legislation through, but that's really down Manchin.

The public will not be putting the blame on Manchin. The public probably barely knows the name Manchin. 

2 hours ago, Altherion said:

Wasn't the deal with the moderate House Democrats earlier that she would bring the bipartisan bill to the floor no later than the end of September in exchange for them agreeing to move forward with the reconciliation bill?

I don't know. But I do know that McCarthy has no leverage or power here. 

 

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Here is what I'm hearing on the current status of the tax bill:

1.  Tax credits and partnership provisions coming out tomorrow (or possibly as late as Sunday).

2.  Tax increase proposal coming out Sunday (or maybe more likely Monday).  Markup to begin Tuesday at 9, so need 24 hours.  Rate increases probably will be effective as of Monday (we shall see).  Cap gains likely going to 25-28% (unclear whether the Medicare Tax on net investment income included).  If it doesn't come out Monday morning, will be pushed to the following Monday.

3.  House is on a razor's edge - people don't like the piecemeal approach.

4.  Excise tax on stock buybacks might happen.

5.  Might limit compensation deductions to $1 million an employee.  We shall see.

6.  199A (pass through deduction) might fully phase out for people making more than $400K.

7.  Step up on death unclear.  Same on carried interest.

8. There is a bunch of stuff on international.  But not sure you all care?

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11 hours ago, Mlle. Zabzie said:

Well, that is not quite right.  Amazon probably would tell you that they make their EMEA profit in Luxembourg.*  Luxembourg has a very beneficial “patent box” that provides incentives for companies to move their IP to Luxembourg (so does the UK, the Netherlands and Ireland, for instance).  The IP rights for use in each country in Europe are presumably legally owned by a Luxembourg subsidiary, and the subsidiaries in those countries pay a royalty (presumably deductible in the home country, and without withholding tax, because all payments are within the EU, assuming there is sufficient “substance” in Luxembourg under applicable third country law).   That erodes the “base” in the relevant countries.  What you could do is what Germany, France and Italy (I think - may be misremembering the jurisdictions) have done, which is to threaten a digital services tax based on end-users.  You could also create a “permanent establishment” based on registration of IP (but that is more radical), or you could impose royalty taxes on all payments of royalties to havens (Germany, I believe, is going this direction, but there are issues with the Luxembourg/Ireland/Netherlands because of EU).  Anyhow, this is the #1 topic at the OECD, and in fact if you talk to any global multinational, these issues and the related transfer pricing issues, are their #1 audit issue in every jurisdiction (and often their only audit issue).  So it’s not like slipping under the radar or anything.

 

*I do not, and never have represented Amazon. I am familiar with global IP and supply chain structures, however.

They sell their products within Germany, they make their profit within Germany. All those products (most of them physical) and revenues are perfectly identifiable. Logic dictates: pay the corporate taxes where you made the money. I am well aware that what Amazon or Apple are doing is legally correct (it’s not only them, you can add basically every multinational) thus I spoke of tax evasion (edit: sorry my mistake, lost in translation, correct word should be tax avoidance).

What you are doing is trying to defend a shit, parasitic system with technicalities. And there are a hundred other possibilities (some of which I am aware), all having the same purpose: shift the profits to the location with the lowest taxes. 

My point is: if there is the will, things can very easily change. 

 

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13 hours ago, The Great Unwashed said:

This slavish devotion to what’s legal will literally end up killing us all. 

Amen brother/sister! The fallback on legalities, technicalities or contractual verbatim is more often than not just an intellectual or ethical cop-out. When you have no rational arguments left, that’s what you do.

The best counter „argument“ then is that until very recently (in Germany for example till the 1990s) marital rape was PERFECTLY LEGAL! Didn’t make it one iota morally or ethically right (by the way our current conservative candidate for the upcoming elections voted against making marital rape a criminal offense, they are all cut from the same cloth, be it the US or Europe, just a matter of how much they can get away with).

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Question from an ignorant Eurocommie...
How likely is the secession of Texas?


I know it's been discussed in the past; but it seems to me that the likelihood has increased by at least 1 order of magnitude recently, with the the Justice Department sueing the state over the new abortion law; and now federal government imposing a vaccine mandate on all employees and those who do business with the federal government.

The last time I checked in on the debate, the polarisation of US politics was way, way less severe (pre-Trump, possibly even Obama;s first term). I'd be interested to hear views currently.

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9 hours ago, Arakan said:

They sell their products within Germany, they make their profit within Germany. All those products (most of them physical) and revenues are perfectly identifiable. Logic dictates: pay the corporate taxes where you made the money. I am well aware that what Amazon or Apple are doing is legally correct (it’s not only them, you can add basically every multinational) thus I spoke of tax evasion (edit: sorry my mistake, lost in translation, correct word should be tax avoidance).

What you are doing is trying to defend a shit, parasitic system with technicalities. And there are a hundred other possibilities (some of which I am aware), all having the same purpose: shift the profits to the location with the lowest taxes. 

My point is: if there is the will, things can very easily change. 

 

No, I am just pointing out how the system actually works.  But, let’s say that a German develops a product within a German company.  The German company registers the IP in Germany, through the Madrid Protocol elsewhere among member states of Madrid and also in non-Madrid states, and the German company owns all of that IP.  Let’s take a few examples:

1.  German company gives a limited license to the IP to a third party Chinese manufacturer under a contract manufacturing arrangement, and pays an amount to the the manufacturer to produce the product for a fee.  Then the German company contracts with a third party US distributor.  The US distributor buys the product from the German company and also pays a royalty to the German company to use the trademark and goodwill to sell the product in the US that comes down to a percentage sales in the US.  The US distributor makes a profit, but when you add everything up the German company is making the lion’s share of the global dollar of profit associated with the product because it owns the monopoly on the intellectual property that produces the product.  Note that each of the Chinese contract manufacturer and the US distributor pay tax on their profit in China and the US, respectively (again, however, Germany is taking the biggest tax bite).  Does that bother you?

2.  Same arrangement, but German Co, AG owns each of the Chinese manufacturer and the US distributor.  Same result (but you are fighting with each of China, Germany and the US about the amount of profit allocated to each jurisdiction to make sure that it is consistent with an arm’s length principle).

3.  Same, except Germany sells the IP at a FMV price (which, btw, I think is basically magic, but that’s a valuation question) to a Luxembourg patent box.  This is where I think things might start to break down for you.  Germany will levy a huge exit tax on that sale (the idea being to capture the present value of the tax that would have been paid), but because it will be based on a valuation, maybe it’s not enough.  This will be audited.  

4.  Now, put a US company on top.  Unlike the German parented example, the US parent is paying tax on the worldwide profit, at least notionally, taking into account both BEAT and GILTI.  However, the income may be sheltered by foreign tax credits (maybe) or net operating losses carried forward (maybe).

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32 minutes ago, Which Tyler said:

Question from an ignorant Eurocommie...
How likely is the secession of Texas?


I know it's been discussed in the past; but it seems to me that the likelihood has increased by at least 1 order of magnitude recently, with the the Justice Department sueing the state over the new abortion law; and now federal government imposing a vaccine mandate on all employees and those who do business with the federal government.

The last time I checked in on the debate, the polarisation of US politics was way, way less severe (pre-Trump, possibly even Obama;s first term). I'd be interested to hear views currently.

Less than 0.1% chance. They just like to talk about it.

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Let’s say the Chinese company rips off the intellectual property, or an Indian one only pretends to do quality assurance, and the U.S. stops inspections. How about Brexit as a means to shirk reasonable standards? The U.S. fails to oversee pervious standards meant to insure public safety. Russia becomes a mobster conglomerate. Dystopia?

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14 minutes ago, HoodedCrow said:

Let’s say the Chinese company rips off the intellectual property, or an Indian one only pretends to do quality assurance, and the U.S. stops inspections. How about Brexit as a means to shirk reasonable standards? The U.S. fails to oversee pervious standards meant to insure public safety. Russia becomes a mobster conglomerate. Dystopia?

Utopian graft!

But seriously, if you want to reform something, you need to understand what is.  As nice as it is to think about burning everything to the ground and starting over again, that’s not the real world.

It’s a lot, lot, lot easier to abuse sales with respect to digital, rather than physical products.  The tax system was built for physical goods and what I’ll call legacy services (I.e., in person).  Digital products and services weren’t even considered when the system was built.  There is a huge amount of global effort going into how to conceputalize the digital world.  The OECD BEPS (base erosion and profits shifting) project had a huge focus on this.  

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Senate Democrats Close To Agreement On Voting Rights Compromise
The bill is being crafted by Sen. Joe Manchin (D-W.Va.), who opposed the original bill, and a group of Democrats.

https://www.huffpost.com/entry/for-the-people-act-compromise-joe-manchin_n_613a6127e4b0628d0958fbf9

Quote

 

Manchin is reportedly already shopping his compromise proposal to Republicans in an attempt to bring ten of them along to break a filibuster, according to Politico. He has consistently stated that he believes Republicans can support a voting rights bill that looks like the compromise draft he put forward in June, especially since it includes a national voter identification requirement, something Republicans have long sought. The likelihood of Manchin finding any Republican support is, to put it lightly, low.

Schumer is likely to file for cloture on the compromise bill soon after the Senate returns, setting up a floor vote. Republicans will then be given the opportunity to block the bill for a third time. But this time, they will be blocking Manchin’s bill.


Once his compromise bill is blocked, the debate over the filibuster that has been boiling all year long will really begin. That will mean confronting the opposition to changing the filibuster rules publicly expressed by both Manchin and Sen. Kyrsten Sinema (D-Ariz.). Manchin stated this year both that he would never weaken the filibuster rules and that he would back a so-called “talking filibuster.” Sinema also stood by her opposition to changing the filibuster rules all year, but also stated her support for a caucus-wide debate on it in a Washington Post op-ed in June.

The question voting rights activists raise about Manchin is whether he would invest so much time and effort into crafting a compromise bill only to let his own opposition to changing a procedural rule destroy all the hard work. Why play the role of the late Sen. John McCain (R-Ariz.) giving the thumbs down to tank his party’s top priority legislation when he co-wrote the bill? Less is known about Sinema’s position, but she is a co-sponsor of the bill and a vocal supporter of its policies.

The answer to that question is expected to come in October or even November, as the ongoing infrastructure and social program fight intervenes in the leadup to the Sept. 27 reconciliation deadline. But the full-fledged fight over voting rights, with the parties on opposite sides, one for voting rights and the other opposed, and whether a minority can filibuster to block the protection of those rights will now be had.

 

 

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