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Unemployment is foremost on everyone's mind today. Yet jobs can continue to leave the U.S. because of the threat of new taxes, the convergence of technology, the ease of digital collaboration and ready access to abundant foreign engineering talent.
Multinational corporate executives may have to move R&D, product development, management and manufacturing overseas when there is no longer a comparative advantage to staying in the United States. A shocking thought for sure, but it's the new reality.
After Japan, the U.S. has the world's highest corporate tax rate, and there is seemingly no willingness by Washington to bring rates down.
In fact, the Obama administration recently proposed taxing the foreign profits of U.S.-based multinationals even when those profits were not repatriated, but backed away when executives threatened to move offshore. Obama aides acknowledge that the administration has set aside the idea for now, but plans to revisit it in a broader tax overhaul sometime next year.
This ambiguity and the threat of new taxes from Washington, such as cap-and-trade, have already prompted 11 major U.S. companies to move offshore in the past year.
Tyco International, Foster Wheeler, Weatherford International, Nabors Industries, Noble Corp., TransOcean International, United America Indemnity, Cooper Industries, Covidien, Ingersoll-Rand and Accenture have all completed or taken steps to change their domicile of incorporation, with Switzerland and Ireland as the most popular relocation destinations.
Commenting on his company's decision, an Accenture board member asked, "What shareholder would ever vote to incorporate in a country that taxes your worldwide income?"
But it is not just taxation that is chasing corporations out of America. Another top consideration is access to talent. The U.S. now spends more per capita on public education than any other OECD country, but its students test in the bottom decile.
The U.S. Government's National Assessment of Educational Progress generates the "Nation's Report Card" annually. For the last 10 years, less than 25% of American high school seniors achieved a rating of "proficient" in either math or science. In August 2009, the ACT test service announced that only 23% of this year's high school graduates tested adequately in reading, writing, math and science to succeed in college. This is a national embarrassment.
Everyone understands teacher quality is the key determinant of academic success. However, teachers' unions don't allow performance appraisals and merit pay. So, many top-performing teachers get frustrated and opt out, leaving behind the less competent who keep the bar low.
Microsoft's launch this week of its Windows Azure cloud computing platform could, some say, mark the end of the Bill Gates era at Microsoft and the true start of the Ray Ozzie era. Under co-founder Gates, Microsoft (MSFT) focused on PCs as the center of the computing world. Ozzie, who took over as ...
In a perfect world, there’d be no confusion about what constitutes an uptrend, a proper buy point, or a handle. Alas and thankfully, the market is a two-sided affair and its very existence is due to those very same differences, amongst other variables worthy of debate and wagers. On that ...
'He sounds like President Bush," I said to myself. President Obama spoke somberly at the memorial service for the 13 killed in the Fort Hood shooting rampage. He movingly praised the valor and selflessness of those who gave their lives, as well as those who enlist to help protect the country. Many ...
It was fascinating to see Barack Obama warning us not to leap to conclusions about the killings at Fort Hood, Texas — after the way he leaped to conclusions over the arrest of Henry Louis Gates, when he knew less about the facts than we already know about the massacre at Fort Hood. If ...
Rep. John Shadegg, R-Ariz., voted "present" on the Stupak amendment to the health "reform" (socialism) bill passed narrowly by the House last Saturday. The amendment added language proscribing federal dollars to be used for abortions, whether directly or indirectly, and a number of Democrats made ...
Posted By: jamies(5) on 11/16/2009 | 10:57 PM ET
Having just returned from a private clinic in Houston where a large part of the staff came from countries other that the US, I can say we indeed have a problem in this country, and it has roots many years in the past. We have dumbed down our schools; and the Boards of Education are run by teachers and/or their spouses or PTA types - nice cozy relationships all around. In many areas the teachers are not qualified but because they are grandfathered they are employed until retirement.
Posted By: johnrock(5) on 11/16/2009 | 10:19 PM ET
Unions can create problems for the reasons mentioned but the real problem is the bureaucracy associated with the educational system. A few examples are the mainstreaming of children that do not have the capacity to function within a normal classroom and the massive documentation teachers must produce for children with behavioral problems before any action can be taken. When teachers are forced to spend enormous amounts of time working with a small number of problem students that should be getting help from special education teachers, the rest of the classes education is diluted.
Posted By: ajmc(175) on 11/16/2009 | 7:33 PM ET
With all of the shenanigans going on in Washington, D. C., I believe you will see individuals & families opting to emigrate to friendlier environments as well. I have been considering relocating to Ireland myself. I know its economy has been challenging due to the recession, but with only a 12% Corporate Tax, no TARP or Stimulus, etc., the rebound should be much quicker. As for the companies moving offshore, I wonder if they might be a better investment opportunity now with lower taxes to pay?
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