Forum Post: US tax break for making products not in the US. Please read.

This is how US Companies avoid their income taxes.

Company "X" owns 100% of company "Y".

This means that if company "Y" makes any money than "X" really made money.

Company "Y" is located in any country but the United States; they make an item and it costs $1 to make.

They sell that item to Company "X"(located in the United States) for $9.99...yes that means they sold the item to themselves.

In the United States I buy that item for $10.

So Company "X" made $.01...$10(sale price)-$9.99(cost to purchase) in the United States.

Company "Y" made $8.99...$9.99(sale price)-$1(cost to make) not in the United States.

Now the law is along as Company "X" never makes Company "Y" bring that $8.99 back into the United States then they never have to pay taxes on it.

This is not a joke. A company sells itself a product from itself and gets a tax break. I am not making this up it is called transfer pricing. Sunday night on 60 minutes the CEO of General Electric was interviewed, here is part of that interview transcript from CBS.

"Immelt is also supporting a tax holiday for global companies to get them to bring back home more than a trillion dollars in profits they're keeping overseas. He says businesses would start hiring, even though they didn't when a tax holiday was tried in 2004.

A tax holiday; so instead of paying their taxes like citizens have to; they want a tax holiday on a trillion dollars in profits!

We not only need to not allow this, we should not have a part of our tax code that gives tax breaks to United States companies making products not in the United States.

I hope this was helpful.