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      - page 22 / 47

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Machinery

Quality Control Product Safety

Parts

Major Components

Product

Distribution

Manufacturers

Retail

Raw and Industrial Materials

Logistics

Brand Headquarters Product Design Branding Marketing

Location:

Shipping

Pertinent Policies:

Taxes Tariffs Labor costs Other costs Exchange rates Investment rules Infrastructure Environmental regulation Education & training Product safety IPR protection Risks

Taxes Tariffs Labor costs Other costs Exchange rates Investment rules Infrastructure Environmental regulation Education & training Product safety IPR protection Risks

Tariffs Transportation Fuel costs

Infrastructure

Cargo security

Risks

  • Taxes

Tariffs Labor Costs Other costs Exchange rates

Infrastructure Environmental regulation Education & Training Product safety IPR protection



The public policies shown in Figure 5 are not necessarily ranked according to magnitude of effect, but taxes tend to be at the top of any list of issues for international business. Under the current system, U.S. taxes are applied on a worldwide basis to U.S. firms while granting foreign tax credits in order to alleviate double taxation of the same income. In short, multinational corporations pay taxes on their global income but receive credit for taxes paid to foreign governments. The system permits U.S. firms to defer taxes on foreign-source income indefinitely by not repatriating profits. In effect, the current system provides an incentive for companies to retain profits abroad and to invest in low-tax countries and a disincentive to invest in high-tax countries.

There have been numerous proposals to “fix the tax code” internationally. One proposal that would provide for a country-neutral tax system would be for all countries to tax businesses at the same rate (so that a country’s corporate taxes would provide neither an incentive nor a disincentive to invest or manufacture there) and for the United States to retain its foreign tax credit. Governments, however, seem reluctant to cede the ability to change tax policy and appear

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