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Trumps tax bill?

Middle_Ground

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A few weeks ago or maybe days I don't know.
Sherrod Brown of Ohio said something about the tax bill giving a 50% tax cut to companies that produce in Mexico.
I can't find more information on this...is it true that if you produce in the US you pay 21% but move to Mexico you pay 10% and it's all part of the new tax bill?
And that Trump did not know it was part of the bill?
If true what do you think about it?
 

JasperL

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A few weeks ago or maybe days I don't know.
Sherrod Brown of Ohio said something about the tax bill giving a 50% tax cut to companies that produce in Mexico.
I can't find more information on this...is it true that if you produce in the US you pay 21% but move to Mexico you pay 10% and it's all part of the new tax bill?
And that Trump did not know it was part of the bill?
If true what do you think about it?

This article explains it pretty well.

https://www.washingtonpost.com/poli...math-gm-moving-mexico/?utm_term=.9067f85fa65c

The short answer is there is now a minimum 10.5% tax on foreign income (it's way more complicated than that, but that's the simple version). And there are many cases where companies are able to produce "profits" in a country and pay 0% tax on that income. So instead of paying 0%, the new law says they have to pay 10.5%, which is still half the U.S. rate.

Mexico has a 30% corporate tax rate, so profits sited in Mexico certainly aren't taxed at 10%. What often happens is companies use various transfer pricing mechanisms to shift profits out of Mexico to a tax haven, and much of the profits earned face far lower rates than 30%, as low as 0%.

At any rate a fair reading of the TCJA is that it was a MASSIVE corporate tax cut, but that it did reduce (but not eliminate) some of the tax advantages of operating overseas and reduced companies' ability to use bogus transfer pricing mechanisms to shift U.S. profits offshore to tax rates as low as 0%, and to shift their foreign earned income to those same tax havens. So it was a decent step to more sane taxation of foreign nationals.
 

Tom Horn

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A few weeks ago or maybe days I don't know.
Sherrod Brown of Ohio said something about the tax bill giving a 50% tax cut to companies that produce in Mexico.
I can't find more information on this...is it true that if you produce in the US you pay 21% but move to Mexico you pay 10% and it's all part of the new tax bill?
And that Trump did not know it was part of the bill?
If true what do you think about it?
The 10% rule is due to the cap mexico agreed to for corporations headquartered there. We are the ones wanting to limit it to 10%. Mexico wants who knows how much more. If it was free floating, the silver and golf mines would go under and you’d have gold at 5K and silver at 800
 

JasperL

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The 10% rule is due to the cap mexico agreed to for corporations headquartered there. We are the ones wanting to limit it to 10%. Mexico wants who knows how much more. If it was free floating, the silver and golf mines would go under and you’d have gold at 5K and silver at 800

That's not true on a number of levels, starting with the idea that changes in the INCOME tax in a single country on a global commodity would cause the price of the commodity to quadruple. It's just completely wrong. A much closer estimate is that it would have a 0% change in the price of gold and silver. Mexico is the #9 producer in gold, for example. And small moves in the price of gold would overwhelm the bottom line impact of a change in INCOME taxes on the profits of a mine.
 

Tom Horn

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That's not true on a number of levels, starting with the idea that changes in the INCOME tax in a single country on a global commodity would cause the price of the commodity to quadruple. It's just completely wrong. A much closer estimate is that it would have a 0% change in the price of gold and silver. Mexico is the #9 producer in gold, for example. And small moves in the price of gold would overwhelm the bottom line impact of a change in INCOME taxes on the profits of a mine.
sure. ( I’m still laughing ) all the exploration drilling and future production halted.
And all the claimed losses from investments. Yes. Quadruple. And overnight too. Your 850 ounce of gold costs would never go down. Africa would be the least expensive producer ( not S/A ) at that point. As it now stands the gold producers are just hanging on. The silver producers are teetering upon bankruptcy. ( now close their most profitable mines)
 

JasperL

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sure. ( I’m still laughing ) all the exploration drilling and future production halted.
And all the claimed losses from investments. Yes. Quadruple. And overnight too. Your 850 ounce of gold costs would never go down. Africa would be the least expensive producer ( not S/A ) at that point. As it now stands the gold producers are just hanging on. The silver producers are teetering upon bankruptcy. ( now close their most profitable mines)

Why would profitable mines halt production, because the income taxes on their taxable income went up? And if the gold producers are just hanging on, which implies global prices are too low to justify mining activities, then income taxes on profits are at the bottom of their financial concerns.

And if global gold prices "quadrupled" overnight, all those unprofitable mines in Mexico, plus marginal mines all over the world, reopen or ramp up production to take advantage of higher commodity prices, flood the market with new supply, and prices plummet overnight.

Besides, can you link to this 10% income tax rate cap in Mexico? They do have a 10% capital gains tax rate, but we're talking about the corporate level income tax on corporate income, which is different....
 

Tom Horn

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Why would profitable mines halt production, because the income taxes on their taxable income went up? And if the gold producers are just hanging on, which implies global prices are too low to justify mining activities, then income taxes on profits are at the bottom of their financial concerns.

And if global gold prices "quadrupled" overnight, all those unprofitable mines in Mexico, plus marginal mines all over the world, reopen or ramp up production to take advantage of higher commodity prices, flood the market with new supply, and prices plummet overnight.

Besides, can you link to this 10% income tax rate cap in Mexico? They do have a 10% capital gains tax rate, but we're talking about the corporate level income tax on corporate income, which is different....
it takes roughly 80MM to open an underground mine an mill operations to start up. Yes. Gold producers spend about 850 bucks to produce an ounce of gold. Silver producers spend 17 to sell their ounces at 14.
 

JasperL

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it takes roughly 80MM to open an underground mine an mill operations to start up. Yes. Gold producers spend about 850 bucks to produce an ounce of gold. Silver producers spend 17 to sell their ounces at 14.

What does that have to do with income taxes and the impact of changes in income taxes in one country on the price of globally traded commodities produced in dozens of countries?

For example, if silver producers are losing $3 per ounce mined, why will the $0.00 in income taxes, which is the 30% in income tax on their $0.00 in profits, affect the price of silver?
 

Tom Horn

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What does that have to do with income taxes and the impact of changes in income taxes in one country on the price of globally traded commodities produced in dozens of countries?

For example, if silver producers are losing $3 per ounce mined, why will the $0.00 in income taxes, which is the 30% in income tax on their $0.00 in profits, affect the price of silver?
if a miner in canda has to pay more for their Mexican mine profits it’ll kill the deal. Maybe that’s why these new Canadian mines are opening up. For foreign miners of gold I like Zimbabwe, Tanzania and Columbia. SantaCruz Silver operates at a small loss so mexico obviously can’t up their taxes. Go ahead and purchase the leach pits for their structured inticements. See if I give a ****.
 

Middle_Ground

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Sorry but I'm a little lost in the weeds here, with the whole gold thing.
On the first answer I'm thinking its what Brown said a 50% off coupon for corporations moving to Mexico but it's better than the 0% that was there before?
 

JasperL

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if a miner in canda has to pay more for their Mexican mine profits it’ll kill the deal. Maybe that’s why these new Canadian mines are opening up. For foreign miners of gold I like Zimbabwe, Tanzania and Columbia. SantaCruz Silver operates at a small loss so mexico obviously can’t up their taxes. Go ahead and purchase the leach pits for their structured inticements. See if I give a ****.

I'll leave this here as it's completely unrelated to the OP and I have no idea what you're talking about. Sounds like you think you're on an investment forum talking about hot stocks or something. Can't figure it out.
 

JasperL

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Sorry but I'm a little lost in the weeds here, with the whole gold thing.
On the first answer I'm thinking its what Brown said a 50% off coupon for corporations moving to Mexico but it's better than the 0% that was there before?

No one including the person talking about gold knows how that discussion relates to your question.

You're partially correct on the summary. I'll put it this way - pre-TJCA it was possible and happened with some regularity, with schemes explained in various news outlets, that someone like Apple could earn $billions overseas and have those earnings escape income tax EVERYWHERE - tax rate of 0%. One tax shelter scheme was called the Double Irish with a Dutch Sandwich.... The only problem comes when Apple decides to repatriate the money back to the U.S. at which point it was subject to U.S. corporate income taxes at 35%. So Apple and others stashed $trillions offshore, versus paying tax on bringing it home, and the big boys could access cheap money and so didn't care that they had to stash it offshore which they did, and told the U.S. we will bring it home when you lower taxes, which they did. That's what being a massive multinational gets you - a Congress that does your bidding!

I've heard various accounts of what TJCA did, but the most common interpretation (and we don't really know yet - this is year 1 and those big boys have collectively thousands of smart people on the payroll whose only job in life is figuring out how to game the tax systems of dozens of countries, and 50 states to reduce income tax bills to nothing, ideally) is that the minimum tax provisions on foreign income at least mean most companies will pay something like a 10.5% minimum tax on overseas earnings. So, yes, to the extent they were paying less than that, it's an improvement.

One sign that it wasn't a very big deal for multinationals is how little squealing we heard - none that I saw. If they'd been poked and the new rules would actually hurt them, I suspect we'd have heard, but foreign tax is sort of like quantum physics and to even discuss it intelligently as it will impact Apple and others requires a pretty vast expertise that I don't have. So for now all I know is TJCA might have been a small move in more equitable taxing of foreign operations versus domestic operations. Better than nothing but there are still huge tax incentives for moving business offshore.
 

Tom Horn

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I'll leave this here as it's completely unrelated to the OP and I have no idea what you're talking about. Sounds like you think you're on an investment forum talking about hot stocks or something. Can't figure it out.

I was just trying to tell you why the taxes were so low in Mexico. It’s due to us wanting them that low. Hand in hand with NAFTA.
 
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