Corporate Profits Are Moving OffshoreWritten by William Cate
Corporate Profits Are Moving Offshore By William Cate Published September 2004 [http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]According to a study published in Tax Notes [http://www.taxanalysts.com/], between 1999 and 2002, American companies increased their profits taken in low tax countries by 68%. This means that American companies earned US$149 billion in profits that they took in eighteen tax haven countries. Taking profits in tax havens is a consequence of increasing mobility of capital and existence of sovereign nations with different tax systems. To do this study, Tax Notes analyzed most recently available U.S. Commerce Department data. Most American companies try to lower their taxes by setting up foreign subsidiaries and using internal lending so profits are taken primarily in tax havens and costs are incurred in high-tax countries. Techniques that shift profits to tax havens involve pushing U.S. laws to their limit. However, they are currently legal and corporate officials are obligated to minimize taxes. There is no question but that use of tax havens to lower tax rates makes investing offshore more lucrative than investing in United States. In 2002, fifty-eight percent of offshore profits are now taken in tax havens. Subsidiaries of U.S. corporations now generate profits mainly in tax havens rather than in locations in which they conduct most of their business. This offshore profits trend is expected to continue and by end of this decade, over ninety percent of American's major company's' profits will be earned in tax havens. Similar trends can be found in Western Europe and in Asia. The tax burden is being shifted from multinational corporations to individuals and purely domestic companies. The logical response for individuals is to use same tax loopholes and move their liquid assets offshore to low-tax jurisdictions. The Prime Directive for domestic companies is to become international companies so that they can export their products and services overseas. Once they are doing business outside of United States, these national companies qualify for all tax benefits of any multinational corporation. If trend continues, only people paying income taxes will be local barbershop, bakery and veterinarian. And even their after tax disposable income is likely to be moved offshore.
| | Trading For A Living - Part 1Written by Geoff Turnbull
There can’t be many traders who haven’t at least considered idea of telling boss what they think of him, throwing it all in and going off to trade stock market for a living. It’s a big risk financially, and that uncertainty is what stops most from jumping ship. Is it really possible to trade for a living? The DreamYou know how it is, you’re sitting in a traffic jam at some unearthly hour of a particularly wet and miserable morning, on way to same office you have sat in for too long to remember, and you’re thinking - there must be a better way – life shouldn’t have to be like this. Your mind starts to wander and you find yourself thinking back to that stock you bought only a week ago, and how it skyrocketed giving you enough profit to takes kids to Disneyland in summer, and you begin to consider if you couldn’t make a fulltime living at this trading game. The advantages are certainly tempting; no more pointless meetings with manager, hours to suit, holidays whenever you feel like it, and with your home-office - no more traffic jams. Heck, come to that you could even make home anywhere you want it to be! By time traffic starts moving again. you’re busily calculating how much cash you could make if all your trades went like that last one - you’re almost ready to write your notice letter there and then! The Bad News Time for a reality check. Certainly all of above benefits are there to be enjoyed, but it’s a huge step from full time employee to full time trader. Are you really ready to give up that monthly pay-check just yet? Can you really cope not knowing how much money you’re going to make month to month? Are you prepared for months when you actually lose money instead of make it? There are many things to consider before taking leap of faith. Considerations Before you even think about trading for a living you have to know how much money you need to live on, that is, how much cash do you need to generate every month in order to survive. As a financially minded person you already have good home accounts, or are at very least vaguely aware of where money goes. So take annual figure (monthly is no good, you need to account for annual recurring items like insurance premiums, car servicing, and vacations), add 50% and divide by 12. Why add 50%? Because there will always be unexpected expenses, and as traders we are always prepared to expect unexpected. Now you know how much money you need each month, you can look at your savings and work out how much buffer money you have, that is, how long you could survive without earning anything at all. You can’t expect to be an instantly profitable trader, and even best and most experienced have periods of drawdown, so you need to be ready for worst. If you can’t live for at least six months from your savings then you are probably under capitalised and are not ready to give up that pay-check just yet. An important but often overlooked aspect of under capitalisation is effect it will have on your trading; if you are trading because you need money, then you are trading scared and you’re almost certainly going to lose. You cannot distance yourself from money-aspect of trade if you are relying on money.
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