Will I get rich if I own businesses ?
It is very possible to be rich by the time your 30. You will have to learn the fine art of balancing your life. You will need to sacrifice your time, work long hours while keeping your passion and constant research on your market along with some other things. It can be done though, with hard work.
Will lowering business taxes really bring in more businesses?
I’ll have to make an assumption that this is about the latest proposal by the current US President-elect Mr Trump to lower business taxes.So far, I did not see the response to this inquiry, this is why I’m pitching in.In short, it will not matter. And here’s why.You are a business, you have a couple of billion dollars stashed offshore - you had worked hard to create a net of subsidiaries to legally shield your earnings and now you hold them in some sunny country outside US.You had paid exactly zero taxes on those earnings. And now some “brilliant” person tells you - if you move this money to US, you will only pay 15% income tax on that.And here you are - choosing between paying zero tax and 15%.Which one would you choose?Yes, this is too obvious to even mention.Now, the other part - you are a very big company, and you need to pay money as a dividend to your shareholders.Again, if you move your money to US, you will have to pay 15%; BUT… here’s this “BUT” - if you take out a short-term loan at, let’s say 4% interest, you get to keep your money where it is, and then use that money from offshore to pay in time and even avoid this interest rate.So, again, it’s zero against 15%.Which one would you choose?As you already know from news, US is a highly saturated market - it is a developed country, not the developing one. Many companies - starting with Apple - have left this market and moved towards the growing markets (developING countries) to make more money.There is nothing to grow in US (labor costs are high, liabilities are high, healthcare costs are high to employers), and due to advancements in automation and such, there is no need for all the human power US has - we are moving slowly towards universal income (monthly stipend for all legal US residents, similar to what some European nations have already implemented).And you, a large company, are looking at all of this, politely saying, “No, thank you” and setting your sights to the growing markets who are hungry for your products - since your money are offshore anyway, moving them back and forth just to pay taxes (with absolutely no benefit to your company) is fruitless at best.
When a city or state justifies a tax break to attract a new company based on jobs created, what math are they using?
First of all, clarification is needs in terms of which type of tax breaks are being considered. Is it property tax, employment tax or income tax. So without knowing much, I will just explain so sort what happens in general.Waiving taxes for certain time, or tax breaks, attracts new businesses and start-ups (even existing business choose to relocate) to retain more cash in their business operations.States/city incentifies businesses with such measures with long goals of such as:*raising more taxes in long term ( there will be taxes eventually)*providing employment opportunities for its residents. When preferable and available businesses would like to hire local.( reasons such as moving expenses)*attracting other peripherial businesses*reviving the state with attracting and/or retaining an entreprenuers, talented/smart/ young people*raising demand for commercial/residential properties which also enables revival of contruction industry.*implicitly increasing commercial/residential property values in their locale thus raising more property taxes when land/property values are reassessed*with an increase in property taxes investment in state sponsored education system increases*collectiong more in sales taxes as residents start dining/shopping/getting serviced*ungrading state/city road infrastructures with an increase in motor vehicle/boat/plane registration fees the same is true for the public transportation services*the list can go further including quality of health to other public services.
Why are corporations the dominant form of business in the United States?
As an owner of a corporation he/she is not personally responsible for any financial liabilities of the corporation. They can seize all of the assets in a meltdown of the business and the owner will still retain his/her personal property. Also for the tax breaks that are available when incorporated in certain states. Delaware is popular with insurance corporations.
What are Export Processing Zones and why are they developed?
Export Processing Zones are areas within a city or country where (mostly foreign) businesses get tax incentives to export goods. For the home country, they serve the purpose of enhancing exports and balancing trade. For the country that receives the exports, they provide cheap goods. For the TNC they provide a cheaper place to do business, reducing costs and increasing profits. I'm not as familiar with Pakistan, but 2 big examples are in Mexico and China. In Mexico there is a huge EPZ that manufactures goods that are exported to the U.S. The factory is usually owned by or at least a subcontractor to a U.S. firm. The U.S. firm can take advantage of cheaper labor to reduce their expenses and Mexico benefits because jobs are created. In China, the EPZ was used as a way to attract foreign investment and capital, but at the same time keep it contained and prevent foreign interests from taking over. A foreign company will usually elect to do business within the zone to access cheap labor and tax incentives, but would not go outside the zone due to either prohibitive laws or later on because it was more costly to operate outside the zone.
What is the impact of President Trump's new tax cut bill? Will that really drive US companies to move back to the US?
The effect will be relatively mild.I find it quite interesting that those who scoff at the notion that tax reductions attract companies are the same who lament the fact that U.S. companies stash their money in locations that have lower taxes.Tax competition is a rather contemporary concept, one that was brought forth by globalisation, countries have started competing for the money of the rich, if the conditions in a country are too unfavourable, the wealthy shall simply leave and the country will crumble. Low taxes are one of the conditions that attract foreign investment, thus it is logical that lowering tax is beneficial to a countries economy.Let me introduce you to a country.The Isle of Man.The Isle of Man is one of the richest countries in the world, with a GDP per capita (PPP) of $84,600[1] . Why would a small, rural country be so rich? Foreign Investment.The Isle of Man has no capital gains tax, wealth tax, stamp duty, death duty or inheritance tax[2] .It’s standard corporate tax rate is 0%, with few exceptions[3] .Can the U.S. compete with the Isle of Man? The answer is no, the mild tax cuts are not enough to establish an environment in which most companies feel it is beneficial enough to return.Footnotes[1] Central Intelligence Agency[2] Isle of Man Finance[3] Corporate Tax Rates
What advantages and disadvantages does Washington State have in attracting businesses?
Well, I know that one disadvantage is that the state is misgoverned and running under a budget deficit (I suppose other states have those problems too), but in an attempt to close the budget gap and have money to pay for their own salaries and expensive boondoggles like hiring architectural and 'consulting' firms to paint fancy watercolor pictures of projects that never come to fruition, what does the state legislature do ?? You guessed it - raise taxes on EVERYTHING, including sales tax and business use taxes. Washington has a slightly lower unemployment rate than the national average (9.1% vs. 9.6%), but still, there's not a whole lot of disposable income floating around here. People are buying needs, not wants and luxuries. Five years ago, Washington's economy was booming. Now it is VERY stagnant. -------------- I guess an advantage would be that Washington IS a coastal state, and does a fair amount of importing and exporting, so if that's the business you are considering, it's a good fit. Watch out for those taxes though.
What are tax havens and how do they operate?
Let's be clear, that the United States is a tax haven, and the Unites States is "legal". Why is the United States a tax haven? Or more importantly, for whom is the United States a tax haven?The United States does not tax the investment (capital) gains of non-resident foreigners investing in the United States. Why? To attract foreign investment into the US stock markets.Attracting foreign capital and business is the same reason any other jurisdiction may be a "tax haven" for certain use cases. Example, the Cayman Islands is a tax neutral jurisdiction, allowing it to be an intermediary in international transactions, adding Delaware-like jurisprudence without adding an additional tax burden.The idea there are places you put yourself or your assets and don't pay taxes is a myth. Tax Havens are a myth. International tax planning is incredibly complicated. Jurisdictions use their tax laws, regulations and jurisprudence to attract and not impede business and capital.