Why does Norway have the highest entrepreneur rate in the world?

[Dinner]

Liar: http://money.cnn.com/2009/04/10/pf/t...ates/index.htm


source: http://www.ppinys.org/reports/jtf/businesstax.htm

I see you are being deliberately deceptive as always; only looking at business taxes. I'm reminded of the recent thread where you lied/were deceptive about IL's minor tax increase then claimed all the business would move to WI because of the tax difference only to learn that WI had higher taxes then IL.

The study I'm referring to is the total tax rate which combines Federal, State, and Local tax rates under one total of the median tax paid by state. California is right in the middle.

[DinoDoc]

I see you are being deliberately deceptive as always; only looking at business taxes.

In a thread about business friendly climates, that seems like a good place to start as a comparison.

[Asher]

Regarding the OP, this might provide a possible answer: U.S. States Lead the World in High Corporate Taxes

Somebody's gotta fund all of the killing you guys do with your wars. May as well be you.

[Dinner]

BTW DinoDoc is lying yet again. The US doesn't even remotely have the highest business taxes as there are so many subsidies and loop holes. Hell, numerous fortune 500 companies pay no net taxes at all and even their declared rate of taxation is usually around 10%-20% of profits BEFORE you count all the subsidies, kick backs, free or discounted stuff, and just out & out graft.

The Paradox of Corporate Taxes
By DAVID LEONHARDT
Published: February 1, 2011

The Carnival Corporation wouldn’t have much of a business without help from various branches of the government. The United States Coast Guard keeps the seas safe for Carnival’s cruise ships. Customs officers make it possible for Carnival cruises to travel to other countries. State and local governments have built roads and bridges leading up to the ports where Carnival’s ships dock.

But Carnival’s biggest government benefit of all may be the price it pays for many of those services. Over the last five years, the company has paid total corporate taxes — federal, state, local and foreign — equal to only 1.1 percent of its cumulative $11.3 billion in profits. Thanks to an obscure loophole in the tax code, Carnival can legally avoid most taxes.

It is an extreme case, but it’s hardly the only company that pays far less than the much-quoted federal corporate tax rate of 35 percent. Of the 500 big companies in the well-known Standard & Poor’s stock index, 115 paid a total corporate tax rate — both federal and otherwise — of less than 20 percent over the last five years, according to an analysis of company reports done for The New York Times by Capital IQ, a research firm. Thirty-nine of those companies paid a rate less than 10 percent.

Arguably, the United States now has a corporate tax code that’s the worst of all worlds. The official rate is higher than in almost any other country, which forces companies to devote enormous time and effort to finding loopholes. Yet the government raises less money in corporate taxes than it once did, because of all the loopholes that have been added in recent decades.

“A dirty little secret,” Richard Clarida, a Columbia University economist and former official in the Treasury Department under President George W. Bush, has said, “is that the corporate income tax used to raise a fair amount of revenue.”

Over the last five years, on the other hand, Boeing paid a total tax rate of just 4.5 percent, according to Capital IQ. Southwest Airlines paid 6.3 percent. And the list goes on: Yahoo paid 7 percent; Prudential Financial, 7.6 percent; General Electric, 14.3 percent.

Economists have long pleaded for an overhaul of the corporate tax code, and both President Obama and Republicans now say they favor one, too. But it won’t be easy. Companies that use loopholes to avoid taxes don’t mind the current system, of course, and they have more than a few lobbyists at their disposal.

The official position of the Business Roundtable, one of the most important corporate lobbying groups, is telling. The Roundtable says it supports corporate tax reform. But it actually favors only a reduction in the tax rate. The group refuses to say whether it also favors a reduction of loopholes. In effect, the Roundtable wants a tax cut for its members regardless of how much the tax code is simplified — or whether the budget deficit grows.

The tax filings of companies, like those of individuals, are confidential. In their public reports to investors, however, companies are required to list something called “cash taxes paid” — the total amount of corporate income tax they paid that year, be it to foreign governments, the United States government or state and local governments.

This number varies significantly from year to year, depending on how many loopholes a company qualifies for. So looking at a single year’s number is often misleading. But in a 2008 academic paper, three accounting professors — Scott Dyreng of Duke, Michelle Hanlon of M.I.T. and Edward Maydew of the University of North Carolina — suggested a new method for analyzing corporate tax avoidance.

It compares cash taxes paid over several years — like five, as in the analysis for The Times — to pretax earnings over that same period. The accounting experts I interviewed called it the best available method for looking at corporate taxes.

Some obvious patterns emerge. Companies that lost large amounts of money in previous years can subtract these subsequent losses from their initial profits and avoid taxes until they’re turning a consistent profit. Yahoo falls into this category. Of all the reasons to have a low tax rate, this one may be the most defensible, economists say.

Other companies are able to avoid taxes by spending large sums on new equipment or buildings. Such spending can often be deducted. Southwest Airlines, for instance, has bought a lot of planes in the last five years. Several energy companies with tax rates below 2 percent, like NextEra, Xcel and Range Resources, have likewise been expanding.

A third group of companies simply seems to have become expert at avoiding taxes. When the three accounting professors analyzed more than 2,000 companies, they found big variations in tax rates within almost every subset of companies. Companies in the same industry often paid very different rates, even when they were similar in size.

G.E. is so good at avoiding taxes that some people consider its tax department to be the best in the world, even better than any law firm’s. One common strategy is maximizing the amount of profit that is officially earned in countries with low tax rates.

Carnival pays so little tax partly because of a provision that lets some shipping companies legally incorporated overseas (Panama, in Carnival’s case) avoid taxes. The fact that Carnival’s executives sit in Miami and or that many passengers board in Baltimore, Los Angeles, Miami, New York and Seattle doesn’t matter. Nor does the fact that Carnival isn’t paying much tax in Panama.

Companies that pay relatively high rates tend to be those that are not expanding rapidly and that are not as ingenious as G.E., at least on taxes. The average total tax rate for the 500 companies over the last five years — again, including federal, state, local and foreign corporate taxes — was 32.8 percent. Among those paying more than the average were Exxon Mobil, FedEx, Goldman Sachs, JPMorgan Chase, Starbucks, Wal-Mart and Walt Disney.

The problem with the current system is that it distorts incentives. Decisions that would otherwise be inefficient for a company — and that are indeed inefficient for the larger economy — can make sense when they bring a big tax break. “Companies should be making investments based on their commercial potential,” as Aswath Damodaran, a finance professor at New York University, says, “not for tax reasons.”

Instead, airlines sometimes buy more planes than they really need. Energy companies drill more holes. Drug companies conduct research with only marginal prospects of success.

Inefficiencies like these slow economic growth, and they are the reason that both conservatives and liberals criticize the corporate tax code so harshly. Mitch McConnell, the Republican Senate leader, says it hurts job creation. Mr. Obama, in his State of the Union address, said that the system “makes no sense, and it has to change.”

A lot of economists agree. Then again, any system that creates as many winners as this one won’t be changed easily.

http://www.nytimes.com/2011/02/02/business/economy/02leonhardt.html?_r=1&src=twrhp

[Dinner]

Let us be honest and admit that the reason business groups use lobbyists to funnel billions of dollars each year to politicians is to create loopholes like this, change regulations so that it favors businesses while harming consumers, and to protect the special privileges & loopholes they've previously paid for. It's just corruption plain and simple and no one, and I do mean NO ONE, pays that nominal 35% tax rate which DinoDoc is so busy bellyaching and lying about. Hell, as I said early there have been tons of reports that most Fortune 500 companies actually end up paying zero in net taxes year after year after year once you tabulate what little they give to the government and deduct the huge subsidies they receive from the government. Any time a conservative politician says he wants a smaller government he is full of ****. What they want is to funnel ever more public money into the private companies which own them. Screw what's right, what's fair, or what the people actually want.

[Jon Miller]

Of course, the loopholes benefit the law and financial service industries.

I actually think that our system might be the worse of possible mixed economic systems.

JM

[Fake Boris]

This has nothing to do with what you were talking about.

Operating wells has **** all to do with owning the resource.

Additionally, "Statoil" is not the "Norwegian Government". Unless you believe when people buy shares in Statoil they're buying parts of Norway?

Statoil is a public company -- Norway's government just happens to own a majority share.

Not sure what you're trying to say. The point is that you've got one huge company operating most oil wells in Norway - that would mean more horizontal (and possibly vertical) integration of services within the same company, i.e. less entrepreneurs.

[Asher]

What I'm trying to say is you obviously do not comprehend the enormity of the ecosystem around energy. There's TONS of tiny companies involved started by "entrepreneurs" who do not OPERATE oil wells, but they provide SERVICES. That's why there's huge numbers of small businesses in oil-rich areas, there's tons of little guys who work for the big guys.

Even the oil well operations are frequently outsourced.

[Fake Boris]

I understand. I claim, though, that this ecosystem is not as rich if you've got a huge national elephant instead of an ant's nest as does Alberta.

[Asher]

Your claim is absurd. It has absolutely nothing to do with the size of the company who owns the wells.

****, the oil companies operating in Alberta are all larger and more powerful than Statoil...

It also has nothing to do with who the majority shareholder is of that company. It has NO BEARING on the rate of establishment of small energy services businesses.

Statoil only employs ~28k people. You have to understand that MANY, MANY times that number are involved with the energy sector...

[Asher]

...other countries which have higher entreprenuerism rates including countries which aren't so dependent on oil like... Canada.

Good timing for this article...

http://www.theglobeandmail.com/report-on-business/why-oil-not-cars-is-driving-canadas-economy/article1896460/

Why oil (not cars) is driving Canada’s economy

Kriska Transportation president Mark Seymour knows exactly what happens when the price of oil pushes $100 (U.S.) a barrel. Trucking companies like his hike their fuel surcharges – and Canadians pay more for all the things they buy.

“The bottom line is that it dramatically affects the price of goods to the consumer,” said Mr. Seymour, whose company runs 400 trucks from its headquarters in Prescott, Ont.

The oil price spike is producing a typical showdown between energy producers and consumers. But this isn’t a return to 1980, when Ottawa tried unsuccessfully to shift wealth from drillers to guzzlers via the National Energy Program, setting up a brawl between Alberta and the rest of Canada.

This time, the entire country has evolved into a petro-dollar economy. Canada's fortunes – and its currency – are now more closely tethered to oil than any other industry, including autos, forest products or agriculture.

Vast swaths of the Canadian economy thrive when the price of crude is high, and not just in Alberta’s oil patch. From steel fabricators in Quebec and Ontario, which supply Western Canada’s giant oil sands projects, to Newfoundland oil workers to investors everywhere, $100-a-barrel crude means more work, and more wealth.

“We’re an energy-dollar economy, and we’re functioning better when we’re exporting a lot of it to our neighbours to the South,” explained Peter Howard, president of the Canadian Energy Research Institute (CERI) in Calgary.

The oil and gas sector is now the dominant industrial contributor to Canada’s economy, and by a wide margin.

And Mr. Howard predicts the sector’s contribution to the country’s gross domestic product will rise from 11 per cent to nearly 15 per cent this decade as production from the oil sands ramps up.

Unlike drilling for light crude, tapping the oil sand’s heavy crude is labour and capital-intensive. And those benefits inevitably flow through to the rest of the economy through jobs, purchases, investment and expanded wealth. By 2020, the oil sands industry is expected to add three percentage points to Canada’s economic growth plus an average of 540,000 jobs a year – 44 per cent of those outside Alberta. CERI estimates the industry will buy $170-billion worth of goods and services from other provinces over the next quarter-century.

Canada has also become an oil trading nation. Crude accounts for 20 per cent of Canadian exports, double its share in 2000. Cars and parts, meanwhile, make up just 14 per cent of exports, down from 25 per cent as recently as the mid-1990s.

“Oil and autos have basically swapped places,” pointed out Bank of Montreal deputy chief economist Doug Porter.

While it may not mark a return to the enmity of the eighties, the shift does have political ramifications. The energy-producing regions of the country gain wealth, population and influence. And some of the traditional haves of Confederation, including Ontario, look increasingly like have-nots, tied to a shrinking manufacturing sector.

Economic power is shifting, and the trend will “continue and gather momentum” as oil sands production increases over the next couple of decades, BMO’s Mr. Porter said.

“As people move, so does the political power,” he argued.

While much of the country is awash in red ink, Newfoundland and Saskatchewan are headed for budget surpluses this year, thanks to rising resource royalties.

“No matter how you present the information, it creates tensions within the country at the federal-provincial and intergovernmental level,” said Robert Roach, director of the West in Canada project at the Canada West Foundation in Calgary. “It creates tension just like it does when some people are rich and others aren’t.”

Over the long-term, high prices could also kill the golden goose. The danger is that $100-a-barrel-oil causes “demand destruction,” marginalizing higher-cost oil sands production as consumers seek out alternatives forms of energy, Mr. Roach said.

“At some point, people and governments will spend the money to go to alternatives,” he said, “and that’s not good in the long-term.”

That’s why many in Western Canada are now pushing for a more cohesive national energy strategy. As the Canada West Foundation put it in a recent policy paper, Canada must come “to grips with how we produce and use energy.” High prices, the group says, puts constraints on resources and infrastructure, while new developmenthighlights the oil sands’ environmental and climate challenges.

Among the leading advocates of a more cohesive national strategy is Bruce Carson, Prime Minister Stephen Harper’s former policy director and now executive director of the Canada School of Energy and Environment at the University of Calgary.

“There’s a general recognition among Canadians that the main driver of the economy is the energy industry,” Mr. Carson said. “So we better look at how to pull the various parts together.”

The reality of being a petro-dollar economy is that Canadians may well have to live with a high dollar for an extended period. This, of course, benefits vacationers, cross-border shoppers and companies looking to import foreign-made equipment.

But a lofty loonie is a threat to manufacturers who depend on exports, and most of them happen to be in Ontario and Quebec. Beyond the high dollar, manufacturers also face a sluggish U.S. recovery and new competitive threats from China and other low-cost producers.

“The economic landscape that’s been handed to Canada is friendly to Western Canada and unfriendly to Central Canada, particularly Ontario,” BMO’s Mr. Porter said.

And that could well stir up talk of redistributing the wealth – taking money from one region and moving it to another, said Andrew Leach, an economist at the University of Alberta.

“It’s a conversation we need to have, but I don’t think it’s going to be smooth,” Mr. Leach said. “We can’t have the country pulling itself apart over issues like the oil sands.”

[BlackCat]

Uhmn, it's actually quite simple. Yeah, we have high taxes, but it goes to free education and health care. Healthy high educated people has a larger tendency to start new companies than poor people that has to sell burgers at McD just to survive.

[Dinner]

My point, thank you.

[Kidlicious]

Entrepreneurship is overrated, unless you're talking about specifics. The person who opens up a new convenience store doesn't really do much more than the person who works in one.

I think taxes are a factor though, but not a large one. If taxes are very high for business and very low for employment then there will be less entrepreneurs.

[Fake Boris]

Your claim is absurd. It has absolutely nothing to do with the size of the company who owns the wells.

****, the oil companies operating in Alberta are all larger and more powerful than Statoil...

It also has nothing to do with who the majority shareholder is of that company. It has NO BEARING on the rate of establishment of small energy services businesses.

Statoil only employs ~28k people. You have to understand that MANY, MANY times that number are involved with the energy sector...

Yes, I understand. The fact remains that there is no single oil corp in Alberta having that many employees.