because of his calm demeanor,
patience for office politics,
passion for traffic laden commutes,
capacity to endure inept leadership and management,
and tolerance for incompetence
is primarily self-employed.
The majority of his income comes from him instructing others be it dance classes, finance seminars, or writing books because, frankly, in all instances he has no boss. He gets to decide how things get done and (surprise surprise) it GETS DONE BETTER, FASTER AND CHEAPER than if he had some middle management yutz looking over his shoulder all the time.
However, whatever success the Captain has had, has been preceded by many failures. And that is the trick to success - failure.
For every successful venture I've come up with, there's been at least 3-4 ideas that just never took. It's very much like dating. In my youth I was considered a player. But for every girl that said yes, there was at least 8 that said no. Still, the frequency of my success led men in my cadre to believe I was a player, and this principle still applies to economic adventures.
So the Captain's come up with a new one. And, like all the other ventures before it, he's planning on this one failing too. But if it takes...hooooo boy! The Captain might just buy that Pontiac Solstice he's always wanted.
The idea is based on "capital flight." And essentially your beloved Captain would be a broker, brokering deals to get companies out of the US and move their headquarters to.....
Canada.
"Canada?" You ask.
"Yes, Canada." I reply.
"Why Canada?" you might ask.
Well here's why.
First, you have an increasingly hostile environment here in the US towards "big business." If you can stomach the outright lies and ignorance, listen to the Ed Schulz Show and you cannot go 15 minutes without one caller calling in and saying,
"You know, when are we going to have policies for the little man? When can your hard working Joe get a job? Where are all those jobs?"
and within 5 minutes another caller calling in and saying,
"You know, it's these damn corporations that aren't paying their fair share. We need to tax them and the rich! When are these criminals going to be forced to do their part for society?"
The entire time Ed just blatheringly agreeing with them.
But it goes beyond lefties listening to commie radio. There is a critical mass of people who are so blindingly ignorant of basic economics, they blame almost all problems on "big business" and "the rich."
Ask your average 22 year old "college graduate" the solution?
Tax the rich.
Why are we in the economic situation we're in?
Big business and George Bush.
Why are their nuclear reactor problems in Japan?
Big business cut costs just like they did in the Gulf of Mexico oil spill.
Of course the solution is to tax and regulate (and then whine when there aren't any jobs), but in the end the business climate in the US is simply hostile. Businesses should be looking to relocate.
Second, where does a business decide to relocate? Well among other things you look for a stable country, with the rule of law, relatively uncorrupt, and an educated population. Well shucks howdy, Canada not only has all those things, but they're right next door to the US. And not only are they next door, they speak English. And not only do they have these things, guess what? Despite the Magic O bringing Kumbya Nirvana to the US, it seems Canada is trouncing the US in terms of corruption. 8.9 vs 7.1 (the color is misleading as the US is at the bottom of that color spectrum while Canada is at the top).
Third, have you looked at the finances of Canada vs. the US? I'll take Mr. Harper over Mr. Obama any day.
Fourth, and here is where the ole Captain hopes to bag some great clients. Statutory corporate tax rates in the US are 40%. In Canada, they are slated to be a mere 15% come 2012. Mexico, 30%.
Now is the time you can fully expect the automotonic response from the left about "the corporations don't pay that amount. They use LOOPHOLES. Their effective corporate tax rates are MUCH lower."
Yeah, "much" lower. try 32%. And forget the whole concept a corporation wouldn't be engaging in the accounting trickery in the first place if corporate tax rates weren't 40%. And never mind if they move to Canada they would still beat the effective corporate tax rate by more than half.
But I am not here to preemptively strike leftist arguments about corporate taxes (no matter how fun and easy it is to do). I'm here to simply point out a very lucrative market.
Say I approach 3M (whose CEO has been hinting he might make a great client). Well, of course the leftists here hate big business. And since 3M doesn't pay any taxes here at all because of "loopholes" then nobody should miss them if they up and leave, right?
Well here's 3M's latest income statement;
Wow, I guess they are paying taxes after all!
Not the 40%, but just shy of 30% on average.
Now assume good ole George of 3M decides to hire the Captain. The Captain arranges for some meetings, and we get 3M to relocate to Canada.
What kind of savings did the ole Captain bring to the 3M shareholders?
Well, under the Captain's plan 3M shareholders would have to pay $863 million in taxes.
In 2010 they paid $1.6 billion.
A savings of $740 million.
The type of dollar figures I'm talking here are on par with the other brilliant idea I had about...oh.....5 years ago. Back then I had this funny idea there was a housing bubble forming. And that if the entire financial services industry just listened to me (or Shiller, or Roubini, or Schiff), I would have saved the country hundreds of billions of dollars.
But nooooo. You don't have an MBA and didn't go to Harvard like our dear leader, Obama.
Regardless and sarcasm aside, you throw in a 3M, a General Mills, a Best Buy, a Cargill and soon we're talking real money. And not only are we talking real money. We're talking huge economic ramifications for the country.
For you see, the ole Captain, along with all of his readers, can go ahead and laugh at himself knowing due to the lethargy of corporate America, such a revolutionary idea is nearly impossible. And the Captain, like when he went up and asked out Charmin Michelle not knowing who she was, is fully aware his chances are very slim. But for all of the people in the US who love to hate corporate America and blame "big business" for everything, don't worry. The Captain is working on it right now to get those evil, icky, yucky gross corporations out of here so you don't have to suffer under them any more.
26 comments:
Canada's VAT averages 13%. US average sales tax is more like 6%. Saving corporate tax isn't so fine if your customers are stuck paying a big VAT instead.
New Zealand is an interesting country tax-wise. Really far away from everything, and their Internet connections are terrible, but it seems the most libertarians of first-world countries.
My hat is off to you, if you're capable of listening to the Ed Schultz show for 20 minutes in a single day. Ever been in a room with a smart, motivated person who makes everybody in the room smarter and more motivated just by being around him?
Well, Ed Schultz is the opposite of that guy.
Randian,
Correct, but I'm just talking corporate HQ's. You'd leave the assembly to Mexico, China and other places 3M has already moved their manufacturing to.
New Zealand would be great. I already looked into citizenship there. Good luck getting in.
You do you realize that we have our own housing bubble forming up here don't you? In fact, it's about ready to pop and the result is going to be rather nasty. Our real estate position is exactly where the States were 3 years ago.
You also have to realize that PM Harper may be heading to the polls soon and the results may not go in his favor. The entire opposition wants to eliminate the corporate tax cut plan that Harper wants to employ and they're willing to trigger an election over it. Odds are 80/20 in favor of an election in the near future.
I wouldn't go jumping on the bandwagon just yet.
Interesting idea, a few things to consider:
The tax rate you mention for Canada is misleading. Tax rates depend on the Province the corp resides in.
In Ontario for example, (a larger province population wise) the combined tax rate (Provincial and Federal) for a CCPC (Canadian Controlled Private Corporation) is 15.5% on the first 500,000 of qualified earnings annually. 3M would not qualify as a CCPC.
The regular combined corp tax rate for an Ontario based public corp. (such as 3M) is 28.25%.
A CCPC has the effect of encouraging small businesses to prosper...tax wise at least.
As for the VAT, it qualifies as an input tax credit to the corp for all purchases made subject to VAT. Thus it flows through to the end user. Send goods to the USA from an Ontario manufacturing plant? No VAT is charged. All VAT paid related to the manufacturing of those goods is refunded.
I've looked into NZ too. However, I've read that the cost of living is much cheaper in Australia.
So how about, Captain? How does Australia look to you?
Thanks!
Australia did a fair amount of work privatizing stuff and righting their economy a couple decades ago. They speak English which is a bonus.
They do suffer from two (as I see it) problems: like Europe, a fetish for population replacement by legal immigration, cultural compatibility be damned, and "smart growth" land use policy that chokes off the real estate markets and makes real estate much too expensive.
Captain your idea might have merit if you concentrate on Alberta.
The rest of the provinces are stuffed to overflowing with the same f-tards that gutted your economy.
Ours will do the same yours did too - when all those socialist birds come home to roost, and the perch breaks under their weight - the only way to fix the problem will be more socialism.
As somebody else said, you guys are only a few swirlies further down the toilet than we are.
Just a comment. I work for a F20 multinational corporation and I attended a meeting recently where the state executive stated that the effective income tax rate for their operations in Minnesota was 28% combined Federal and State.
My personal income tax rate was 21%.
And the exec thought the company's taxes were too high.
BTW, Ed Schultz is a terrific example of of a useful idiot - and he's so much of an idiot he has no clue how idiotic he really is. A hate monger and loon.
It's off topic...but
I like Australia, and have invested in their publicly traded stocks.
Their company corporate filings appear to be more lucid and less fluff than US publicly traded stocks.
It's off topic...but
I like Australia, and have invested in their publicly traded stocks.
Their company corporate filings appear to be more lucid and less fluff than US publicly traded stocks.
One more point on your presentation - the biggest tax advantage that Canada has is that it taxes based on residency, not on worldwide income. The US taxes us multinationals on worldwide income, and there is a ton of complex rules on when taxes are paid on this (Subpart F of the Internal Revenue Code). Canada taxes income generated in Canada only. Plus in the US you have to apportion your US sourced income across the states on a variety of nexus rules. Provinces are based on physical Nexus (no physical property or employees in that province - no provincial income tax filing requirement).
So the tax saving AND the compliance aspect is larger than what you've mentioned.
In Alberta, there is no provincial sales tax included in the VAT . So, in that province the VAT is only 5%.
In Alberta, the cost of real estate is inflated which negates the perceived "gain" from living there.
Well one thing that is for sure. Move your oil industry to Canada. The US government seems to think oil production is a bad thing. Alaska might also consider independence and start developing ANWR. They have this huge oil deposit in a frozen waste land, and some greenie weenies in Washington will not permit any drilling.
You might want to compare the tax free days of both countries. Yes corporate taxes have come down, but regular folks still get gauged.
In Canada the average guy reaches tax fee day at around the six month mark.
I also noticed Peter Schiff, talks a lot about productive Americans moving out of the US, as the economy tanks.
Also, if this becomes an issue, you can expect the US government to enact capital controls. In fact currency controls in the US,(similar to 1925 Britain) would be a major red flag. Captain you have discussed capital flight, but remember currency controls are usually enacted under these circumstances.
3M would be a good fit in Alberta, Alberta has a strong petro-chemical industry with world scale plants from companies like Dow and Nova.
The socialists are slowly seeing that the money has run out and the credit is drying up. Of course when you only have a hammer everything looks like a nail, so the solution to the collapse of big government is bigger government (ask the UK how that's working). But those of us who have been funding the operation (those who generate wealth/GDP) are starting to tighten the strings and saying no.
Saskatchewan is a good alternative to Alberta - but stay away from Ontario or Quebec - both provincial governments have f##ked up their economies.
As for the potential election, I doubt their will be an election over the budget (the Liberals or NDP will chicken out - they are not polling good numbers) and if there is an election I think there will be a Conservative majority (not by much, but it will be a majority).
Randian et al:
Businesses get to claim back any VAT paid against the amounts collected, meaning that for BC, Alberta, Ontario and the Atlantic provinces, the VAT is a non-issue. Saskatchewan's effective VAT is 5%, Manitoba, Quebec and PEI are higher.
For large businesses, most combined corporate tax rates (federal and provincial) come in around 28-30% with some of the smaller provinces adding about 4%. Manufacturing usually gets 2% knocked off the rate.
BC has a Carbon Tax and medical premiums. Ontario has medical premiums too.
Some of the posters were right. Saskatchewan and Alberta are the places to be, and the benefit is that the more US immigrants that come to Saskatchewan, the less likely it is that a business-unfriendly climate crops up.
Some good observations from a number of folks here:
- Taxing dollars only earned in Canada
- Alberta with only 5% VAT
- Conservative majority
- stay away from Quebec or Ontario (I'll add B.C.)
Some eroneous comments are:
- Alberta cost of living suggested high? Living in Minneapolis around Lake Minnetonka isn't? Come on...also Minnesota doesn't have gemstone deposits, oil, alpine meadows, world class ski resorts, Heritage Fund, etc, etc.
- Conservatives not getting re-elected? Jack Bin-Layton (the pornstar), Iggy (Count Chocula) and the Separtist already know a coalition is political suicide (maybe not for the Separtist). Another minority minimum and if a majority count on more business and Canadian friendly moves by Mr. Harper.
Bring on the US Corporations, we are already doing lots of biz, why not more?
Um, Cap, love your blog but Tax Rates in Canada are higher than you have posted, because you haven't included the provincial taxes as well. For example, Ontario charges about 10% corporate income tax, for a combined rate of around 25%. Still less than the USA, but higher than you are suggesting.
@Randian.
NZ should be on your list for the next few years. OZ is suffering from a periodic attack of leftism (minority Left gov't is adding taxes for floods).
NZ has some risks -- the main one is that we are geographically unstable. However, we have a rational immigration and taxation system. Setting up companies is easy. Because our tax system is simple and legal costs have to be paid up front (no contingency fees) it is not a good place to be an accountant or lawyer.
Our internet is DSL. There is no cable. But... we have a university based fast backbone, and are laying optic fibre.
But I'm biased -- I live in Dunedin. NZ.
But I'm biased -- I live in Dunedin. NZ
How does that compare to its more famous cousins: Christchurch, Wellington, and Auckland?
"The rest of the provinces are stuffed to overflowing with the same f-tards that gutted your economy."
Apart from the higher taxes, Quebec is OK...
PS: The f-tards are actually in Alberta ;-)
To follow up - most US multinationals have an effective state tax rate of 6-7% so the effective federal + state rate is closer to 45% versus <35% provincial+federal in Canada.
As a Canadian working in the tax department of a very very very large US multinational - the overall corporate tax burden in Canada is considerably less in tax cost AND in compliance cost.
Hey Captain, 3M already has a manufacturing facility and a Canadian head office in London, Ontario. They've been here for decades.
@Maureen
I guess you were wrong about that election.
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