
James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comFirm Insights
Author: James F. McDonough
Date: February 24, 2015
Of Counsel
732-568-8360 jmcdonough@sh-law.cominstead of producing the greatest after-tax profits, Josh Barro recently wrote in The New York Times.
Barro, a NYT correspondent and former senior fellow for the Manhattan Institute for Policy Research, bemoaned the current emphasis that much of the current discourse places on policies that could motivate companies to move jobs overseas, noting that businesses make decisions on where to hire based on a wide range of variables.
“Employment is a macro issue; it’s not an issue of which particular company is investing where,” said Eric Toder, an institute fellow for Washington, D.C.-based think tank the Urban Institute and co-director of the Urban-Brookings Tax Policy Center, Barro noted. Foreign businesses’ investments in U.S. factories will probably make up for any incentive current fiscal policies give domestic companies to build manufacturing facilities overseas.
There is certainly evidence to support his point of view. While U.S. companies did move production overseas during the jobless recovery, foreign businesses also hired workers in the United States. For example, many major pharmaceutical companies – including Merck and Sanofi – are headquartered in other countries, and have hired research and development staff domestically.
Siemens has repeatedly earned the recognition of Pres. Barack Obama for the investments it has made in the U.S., even though the company is “shipping jobs overseas” every time it provides capital for operations in the world’s largest economy, Barro emphasized. Since companies based both here and abroad are creating domestic and foreign employment, the corporate tax policy conversations are starting to stress revenue instead of jobs.
This new focus was evident in Obama’s latest corporate tax policy proposals, which he unveiled at the State of the Union address in January. During the speech, he stated his desire to tax earnings held overseas at an instant, one-time rate of 19 percent.
Currently, companies are required to pay taxes on these profits when they are repatriated, but have the ability to hold them in foreign nations indefinitely. Under Obama’s proposal, domestic businesses with foreign operations would face the one-time levy on these unrepatriated earnings, but would in turn receive a tax credit worth 85 percent of the taxes paid to the overseas countries where they do business.
To simplify, companies would pay taxes in the nations where they generate income in the first place. As long as the country is not a tax haven, these businesses would not have an obligation to pay anything more to the U.S. government, Barro emphasized. This would be the case even if the foreign jurisdiction has a moderately lower tax rate than the U.S.
Members of both political parties back such territorial taxation, and the approach’s bipartisan support is notable, Barro emphasized.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!