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Old 09-21-2010, 12:42 PM   #21
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Originally Posted by audreyh1 View Post
So often, to make this less of an explicit transfer of company ownership from shareholders to insiders, the company buys back shares to match the grants. But IMO - that is usually money down the drain as company stocks are usually bought at such high prices, and that same money could have been returned to shareholders as a dividend.
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Sure, it could have been returned as a dividend, and I speculate that most shareholders (not all) would prefer to see a reduction of float over a one-off dividend.

Plus, the article mentioned taking on debt to buy the stock back, so that looks to me more like a re-leveraging activity. I doubt they'd issue debt to issue a one-time dividend.
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Old 09-21-2010, 12:45 PM   #22
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It has nothing to do with the company's financials or its sector's fundamentals-- strictly a board resolution and a press release, bingo! Price bounce. It gives the option-holding employee that much more profit above his option's strike price.
Well, it gives the public at large the same price bounce.

And many options are priced so that even with a modest price bounce they're still not in the money.
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Old 09-21-2010, 12:49 PM   #23
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There should *never* be tax benefits for exporting jobs. Ever.
What tax benefit, specifically, are you referring to?
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Old 09-21-2010, 01:03 PM   #24
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What tax benefit, specifically, are you referring to?
It's not that companies get direct tax subsidies for exporting jobs. But depending on where they set up shop, the amount in foreign taxes they pay *plus* any import duties to repatriate the goods into the U.S. can be considerably lower than the taxes they would pay by keeping the jobs, the manufacturing or the R&D here.

For example if a company has a manufacturing plant that pays $50 million a year in U.S. taxes, they might move manufacturing to a country where they would pay (say) $10 million (off of a much lower wage base to boot) and maybe another $10 million in import duties to bring the products back into the U.S.

By shipping jobs overseas the company has saved a total of $30 million in taxes and other governmental fees. And when you add in both the loss of tax revenue for the U.S. government AND the added cost to the social safety net for all these unemployed workers, we are effectively encouraging Big Business to ship jobs elsewhere and leave the taxpayer with not only a larger tab for unemployment insurance and food stamps, but also less incoming tax revenue to pay for it all.

I used to be a gung-ho free trader. Not any more -- it's killing us. I'm not a fan of protectionism, but I think the pendulum has swung too far in the direction of anti-protectionism.
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Old 09-21-2010, 01:39 PM   #25
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I used to be a gung-ho free trader. Not any more -- it's killing us. I'm not a fan of protectionism, but I think the pendulum has swung too far in the direction of anti-protectionism.
I'm confused then. Exactly what are you proposing? Maybe you are just venting (which is OK)? I can understand being upset at the prospect of a lower standard of living for US citizens, but I just don't see how we counter this when much of the rest of the world is very eager to achieve a fraction of what we have.

You mention lower taxes attracting business overseas. Well, our higher taxes go (in part) to support our higher standard of living (SS, Medicare, etc). It's all part of the same thing.

I guess I have to wonder, what makes a US Citizen so 'special' that their (our) higher standard of living should be protected at the expense of someone with a much lower standard of living? And if we use protectionism to keep jobs in the US, we are taking jobs away from others who are worse of than we are. If I may turn your "let them eat cake" comment around, it seems to me US protectionists are saying "let them eat cake" to the third world (and I'm not saying that to try to escalate it, I'm just trying to provide an alternate perspective)?

It ain't pretty, it ain't easy, but I honestly think we need to find a way to truly compete in this 'flat world'. And I'm in favor of some sort of reasonable minimum safety and pollution standards worldwide. Not sure how we accomplish that, I guess the 'Fair Trade" Coffee companies are a positive example.

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