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America’s Fiscal Dilemma

America’s Fiscal Dilemma . Art Franczek President of The American Institute of Business and Economics artf@online.ru. Introduction, Current Fiscal challenges facing the United States The Central role of Tax Policy Repatriation proposal for US MNCs Other recent Tax Reform proposals

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America’s Fiscal Dilemma

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  1. America’s Fiscal Dilemma Art Franczek President of The American Institute of Business and Economics artf@online.ru

  2. Introduction, Current Fiscal challenges facing the United States • The Central role of Tax Policy • Repatriation proposal for US MNCs • Other recent Tax Reform proposals • How US Tax Reform affects Russia

  3. The US currently facing many fiscal challenges • The 2011 Budget will have a 1.3 trillion dollar deficit • The US National Debt is 14.5 trillion dollars • S&P recently downgraded US debt from AAA to AA+(Tea Party Downgrade) • The US has an unemployment rate of 9.1%(the real rate is 16%) • Many economists think the US will endure several more years of stagnation. • A Super Committee was established to create a balanced solution to these issues.

  4. Tax Policy is a central issue for the US. Currently the US has the highest corporate tax rate in the world. It taxes it’s MNCs on a worldwide basis and allows MNCs to defer taxation until dividends are distributed:

  5. US Tax rules encourage MNCs to use exotic Tax Structures like a “Double Irish Dutch Sandwich” or a tax inversion in Bermuda.

  6. US Tax Rules are a major reason that • MNCs have over 2 trillion dollars of profits overseas

  7. A major proposal would allow a Tax Holiday for MNCs. This would reduce the tax rate on repatriated profits to 5.25%

  8. Additional Tax Reform Proposals: • STOP COMPANIES RUN FROM THE US FROM CLAIMING FOREIGN STATUS. There is a draft law that would treat Foreign Corporations that are publically traded and whose management and control in the US as U.S. domestic corporations for tax purposes. • There is a draft law that would require all 50 states disclose the identities of beneficial owners of corporations . • There is a draft law to reduce the U.S. Corporate Tax rate to 25%.

  9. HOW DO U.S. TAX REFORMS AFFECT RUSSIA • If the Tax Holiday proposal is passed US MNCs in Russia may have less money to invest in Russian opportunities. • The Russian economy is significantly affected by the U.S. and E.U. economies. The World Bank recently stated that if the U.S. and E.U. went into recession it is likely that Russia would follow.

  10. “The art of Taxation is like plucking feathers from a goose. The idea is to pluck the maximum amount of feathers with the minimum amount of squealing” Bismark

  11. Thank You Art Franczek President of The American Institute of Business and Economics artf@online.ru

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