By on December 11, 2014

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Just as Fiat Chrysler Automobiles left Italy to escape the tax man, Ferrari is considering the same as it moves closer to leaving the nest by next October.

Bloomberg reports the automaker is also considering remaining in Maranello, though a change in its fiscal address wouldn’t affect manufacturing and engineering operations. A final decision either way could come in the next few months, per the publication’s anonymous sources.

Such a move would prove devastating to Italy beyond the nation’s economy, as Ferrari is considered a national treasure. Milan Bicocca University professor of public finance Ugo Arrigo said the move would show investors and companies alike that the country and its fiscal system as uncompetitive; Italy’s corporate rate is 31.4 percent, whereas the United Kingdom — where FCA calls its fiscal home — has a rate of 21 percent, soon to be 20 percent.

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26 Comments on “Ferrari May Follow FCA Out Of Italy For Fiscal Reasons...”


  • avatar
    psarhjinian

    “Milan Bicocca University professor of public finance Ugo Arrigo said the move would show investors and companies alike that the country and its fiscal system as uncompetitive;”

    Ok, fine. Move.

    But you have to let workers move, work and organize freely across borders, too. Globalization shouldn’t be for the rich alone.

    • 0 avatar
      healthy skeptic

      It isn’t for the rich alone. You ever buy any low-priced Asian-manufactured consumer goods? They’d be a lot more expensive without globalization.

    • 0 avatar
      Car-los

      Globalization is a scum for the super rich. Yes you can buy cheaper goods that come from Asia and other countries but at the expense of exporting jobs too. Is that really cheap? How many American jobs have the crappy cheap goods from Chine cost? Wow, what a bargain!

    • 0 avatar
      stuki

      Workers can, at least for now, follow the company to the UK. Why anyone would want to leave Maranello for a depressing swathe of foggy drizzle is a different question…

  • avatar
    S2k Chris

    Nothing warms my stony capitalistic heart like the flight of a high profile company from a high-tax region. It’s the only way these cities/states/countries will learn.

  • avatar
    kosmo

    Nothing but a power play, looking for some love from the Italian government.

    Ferrari without Italy would result in a lot of lost marketplace magic, IMO.

  • avatar
    Landcrusher

    Once again, taxing consumption is the only way to go. The loopholes in everything else are enormous. Pretty sure we would have more jobs with zero corporate taxes.

    • 0 avatar
      psarhjinian

      Corporate taxes have been going down for years in most western nations, and it hasn’t helped joblessness much.

      That’s largely because corporate taxes are just passed down to the consumer as a cost of business, anyway. Corporations still remit them, but they’re flow-through.

      If you want more jobs, you need to find a way to stimulate demand. You could lower taxes, but all that would do is see companies hoard and fail to invest in people. Heck, that’s what we have done and, lo and behold, cash gets hoarded.

      That said, a consumption tax generally makes things worse. It would be flow-through for the producers, and would hit consumers even harder, further damaging demand and making joblessness worse. What you would want is incentivization to unlock capital and invest in infrastructure.

      So, basically, income taxes, and especially personal ones, should probably go up. Taxing the movement of capital wouldn’t hurt, either. The best option, though, would be more and better infrastructure investment by government, since the private sector is really not picking up the slack (and by holling out the middle class, is making it worse).

      • 0 avatar
        Landcrusher

        1. It’s a race to the bottom. It has helped where a big jump was made, but then others respond.
        2. Flow through, correct, but don’t ignore the externalities that creates from unbalancing competition all the way to the wasted time from new entrepreneur all the way through lobbyist, legislator, bureaucrat, advocates, and voters.
        3. Stimulating demand is not really a government function. Government stimulus is inefficient and short term. Get out of the way is usually the best government response.
        4. The hoarding is a predictable response of executives given the regulatory and political situation. We have tipped over into socialism which just doesn’t work well here. We are a culture of workers and warriors. Violence is going to rise if this doesn’t get turned around.
        5. You could only be correct if you had ideal corporate tax systems, no cheating or lobbying, and poorly structured consumer taxes. As it is, consumers pay more to have the corporations play the income tax games and the taxes than if the games aren’t played at all. See part 2 above. Once you get over the myth that corporations ever pay a tax, you logically must accept that a corporate tax is nothing but an inefficient and unfair consumption tax.
        6. I’ll agree that taxing moving of capital ought to be discussed, but obviously I want no, or at worst, simpler income taxes with lower effective rates (existing marginal rates are killing productivity of married people). Small transaction taxes could actually be good for the markets and help pay for insuring and regulating the financial system.

        • 0 avatar

          I tend to think income is the best tax but I think it’s fine that other taxes exist. I would prefer the US set a low corporate rate and no loop holes or deductions NONE. This should even things out. I would move property tax into income tax also raising capital gains tax on all distributions over 100k per year. And keep sales taxes as they exist.
          I don;t see how a consumption tax would benefit the middle class and poor any better than they system outlined above,

          • 0 avatar
            Landcrusher

            Income is the worst for many reasons. The problem is understanding how bad income taxes really are since for most people they are other people’s problems.

            I can rant all day on income taxes. Why tax production rather than consumption? It’s backwards in the extreme. It’s totally non green since automating anything and putting the worker on welfare becomes a no brainer. The amount isn’t even the real issue. Eventually though, they will become really problematic.

            If you look at plans like the Fair Tax and others, it becomes obvious that you can help the truly poor better with consumption taxes while freeing up people in their most productive years to truly add value to their communities.

          • 0 avatar
            healthy skeptic

            >> I would prefer the US set a low corporate rate and no loop holes or deductions NONE.

            +1

            >> I would move property tax into income tax also raising capital gains tax on all distributions over 100k per year. And keep sales taxes as they exist.

            +1 again

            You talk a lot of sense, mopar4wd.

          • 0 avatar
            Landcrusher

            You can’t have no loopholes in an income tax. If you think it’s possible, you never really paid income taxes. When your accounting bill is over two thousand a year, you will then likely understand. Corporate taxes are even more Byzantine. As soon as you fix the rules to keep the tax from taxing some people out of business or otherwise being obviously punitive in some circumstances you create a loophole.

        • 0 avatar

          Well I agree avoiding cheats is hard. I do pay taxes both personal and my wife and I run a small business (LLC) that pays them as well. I used to pay a accountant about $500 a year for this but I have been doing it myself for the last 3-4 years. I think it is possible, just a simple tax rather low on corporate profits. No deductions. We are only taxing profit not operating revenue so I fail to see how it could kill one industry and not another. Yes many companies would try to avoid turning a profit but that’s the same as now and many companies can’t avoid it.
          It theory a progressive consumption tax seems reasonable, but it’s never really been done before (maybe it has I didn’t check that hard). It would also be very difficult to make it progressive and easily enforceable. If you go with something like a VAT tax you are encouraging saving by not spending which is fine except it’s not fine to have the upper elements of a population saving all their money they need to spend some to make the system work.

          • 0 avatar
            Landcrusher

            So, how much R&D did you deduct? If your inventory value swung with the price of oil, could you see how phantom profits put you out of business? Do you deduct capital depreciation? Could you see the issues there for some industries? It’s a nightmare.

            Furthermore, money isn’t ever stuffed in enough mattresses to make a difference. Saved money is invested and investments create jobs. There is no nightmare where rich people stop spending to avoid consumption taxes. Besides that, you do realize that if I hire a guy to do work he passes along his income tax in the price, but a machine from China avoids our income taxes. How many things are now cheaper to replace from China than to build better and keep for decades with light maintenance using Americans? Why tax ourselves out of work? Why tax work at all?

            Don’t you have to believe that incomes mostly come from government sinecures like in Victorian England and simultaneously disregard the that taxation discourages what you tax to think the income tax isn’t just bonkers?

          • 0 avatar

            I’m no economics major, just a tax payer so I’m not 100% sure I’m right this is just based on my experience as a business owner and tax payer.
            That said here we go

            I think the law would have to have something spelled out about R and D I would say R and D would not count towards profit but rather an operating expense. On phantom profits I think letting business count profit on LIFO is kind of ridiculous. I would prefer using standard GAAP but this is a long standing practice so I doubt we could get rid of it. I always have done the business taxes using a FIFO practice, but I realize I was leaving a little on the table in my case (alot in some other peoples cases)

            On your other point. The closest we have come to a progressive consumption tax was the luxury tax in the early 90’s.
            http://watchingamerica.com/News/94396/u-s-luxury-tax-%E2%80%94-a-total-failure/
            which caused rich people to stop spending money just what you said they would not do.

            In real terms the government still needs the same amount of money to run taxing income is just easier and less invasive then taxing consumption (at least progressive consumption taxing simple consumption tax like sales tax is pretty easy) in the end they will try to get the same amount. It just matters how and who they get it from.
            It’s not like the costs of everything being more expensive won’t be, at least attempted to be passed back thru the consumer. If x used to be taken out of my paycheck and now x is taken from me when I buy groceries I’m still left with the same overall income.

          • 0 avatar
            Landcrusher

            Mopar,
            Reply eaten.

            I’m out of patience typing.

            I”m going to start some sort of protest over this nonsense or just quit coming here.

      • 0 avatar
        stuki

        Taxing personal incomes higher than corporate ones, just enrich those who gets their pay in the form of perks.

        Taxing activity at all, whether income or consumption, requires a massive spying operation into virtually every facet of people’s lives. It’s disgusting, to say the least. And certainly in no way, shape or form compatible with even the most feeble notion of “freedom.”

        The Federal Government can get their revenue from tariffs, like they did before things got too bad. They’re already charged with keeping on top of movement across national borders, of goods and people. Charge a bit above operational cost for it to fund general activity, and be done with it. As a selling point, a shift towards tariffs would also keep them darned slanteyes from “stealing ‘our’ jobs”.

        Local governments can fund themselves with real estate taxes. Real estate is going exactly nowhere. And since it’s kind of hard to claim a lot as your own without letting the government know where it’s at, no untoward spying and snooping required. Morally, if Ted Turner insists on being able to call the cops if some poor sap should set foot on one of the few hundred thousand acres he wants to claim exclusive use of, he really ought to pay up. Ditto on a smaller scale for the guy with a quarter acre.

  • avatar
    John R

    Venite a Delaware! Home of corporate “headquarters” consisting of call centers at best or a receptionist and an ostracized manager at worst.

  • avatar
    schmitt trigger

    Benvenuto a Texas!

    La casa di la libera impresa!

    And we promise we won’t add BBQ sauce to the pasta. Plus our politicians are crooked, too.

  • avatar
    Lorenzo

    No mention of the Euro disaster? Switch back to the Lira, converting Euros on a 1:1 basis, then start devaluing until the economy is competitive. All of southern Europe is strangling with an overvalued Euro based on the German Mark, and it’s destroying their societies as well.

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