"Kerry Carved Out Tax Loophole for Heinz Foods"

Per NewsMax:

Tax legislation proposed by Democratic presidential candidate John Kerry last year was designed to crackdown on companies doing business overseas - but the proposal had one giant loophole: an exemption for companies like the H.J. Heinz Foods Co...

The source of the claim is a three-month old TCS story:

The Kerry team clearly recognized the possibility that they were causing significant harm, because they added a loophole. If a U.S. multinational produces a product in a foreign country for consumption in that country, then they will continue to allow the firm to avoid U.S. tax until the money is mailed back home.

Think of all of the needless and duplicative activity this will generate. Multinationals will be forced, in pursuit of tax savings, to introduce newer and smaller production facilities in every country they serve. Transportation costs are low enough, and scale economies large enough, that most multinationals operate a few production facilities located in attractive hubs around the world.

So why would anyone propose such a thing? Some industries, like food production, already operate that way. Because of local food regulations, and concerns about spoilage, it is often the case that food companies locate a separate plant in each country that they serve. Chief among these is Heinz, which owns 57 plants outside of North America that, as the company states, "provide products to consumers in those markets..."

Politics · Thu, 07/15/2004 - 09:22 · · Importance: 1