The world has started to react to President Obama's proposed corporate tax increases or end to corporate tax breaks (Bloomberg).
In this discussion, KQED looks at how the changes may impact companies in Silicon Valley:
Spain and India where also quick to react. Spain said "its short-term gains, for long-term pains" [listen]. U.S. companies make lots of money in Europe. For example, in Spain, business generated by U.S. companies equals 8% of the country's GDP. India has also expressed concern. More than 60% of India's 2.2 million employed in IT outsourcing are by U.S. corporations. United and Delta airlines recently terminated their contracts in India [listen].
The U.S. already has the highest corporate tax rate in the world after Japan (as illustrated below), but this is for "on-shore" profits. The aministration aim is to crack-down on "off-shore" profits. In 2004, U.S.-based multinationals paid $16 billion in U.S. taxes while earning $700 billion overseas. But what will this do to "comparative advantages"?
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