Corporate Taxes Driving Companies Down and Out

Interesting in that this is a story that we can take as where we are headed if we don't change our tax structure for corporations. Why would these institution want to say here and pay the highest corporate tax in the world when they can relocate to some place that actually wants their business. In a nutshell, the United States is hostel to business under the Obama administration.

We can and must change this in November.

Spain's Tax Take Tumbles as Companies Go Abroad
Source: "Spain's Tax Take Tumbles as Companies Go Abroad," CNBC, October 3, 2012.

October 10, 2012
Spain's corporate tax take has tumbled by almost two thirds from precrisis levels as small businesses fail and a growing number of big corporations seek profits abroad to compensate for the prolonged downturn at home, says CNBC.

Attractive tax benefits can accrue to companies expanding overseas, but for Prime Minister Mariano Rajoy's government, which now seems resigned to accepting a European financial rescue, the income flow is reversed.

•Rajoy has passed 65 billion euros ($84 billion) of austerity measures including public sector wage cuts and consumer tax hikes but has been reluctant to lean on businesses that are key to maintaining jobs when one in four Spaniards is unemployed.
•Despite its domestic woes, Spain is home to globally successful corporations such as banks Santander and BBVA, telephone operator Telefonica, retailer Inditex and oil company Repsol.
•Those five generated net profit of 17.8 billion euros (about$23 billion) in 2011, outstripping the 16.6 billion euros (about $21 billion) the government raised in corporate tax from a total 1,400 Spanish businesses that year.
•In 2007, the corporate tax take was 44.8 billion euros ($57.6 billion).

That the companies have continued posting profits at all is largely thanks to earnings abroad, but as foreign profits are generally taxed where they are made, Spain's coffers have seen less and less.

•Spain receives a smaller proportion of corporate income than personal income, with businesses paying 11.6 percent of total group profits in Spanish taxes compared with 12.4 percent for individuals, according to 2011 data from the Spanish Tax Agency.
•In 2010, 30 of Spain's 35 blue chip companies had subsidiaries in territories considered tax havens, according to the latest report by Spain's Observation Group for Social Corporate Responsibility.
•The organization put the number at 18 before Spain's economic crisis began.

Spain has a headline corporate tax rate of 30 percent, broadly in line with other large European economies. Switzerland, however, has a headline rate of 8.5 percent, and lawyers say deductions can be made to reduce this further.