The US could just do what the EU does and ban sweetheart tax deals. Such tax deals are anti-small-company/unfair and it's a race to the bottom that no one will win.
It will, just like in Ireland. That's the beauty of this deal. It's blackmail basically. If the US does not pass it, other countries will tax the difference even on US profits (company just needs to have presence in the EU). US would be shooting itself in the foot, especially being the one to propose it originally. Also, I am pretty US is already above 15% corporate tax rate.
So to allow this regulatory race to the bottom within a country or a market makes no sense to me at all. Only if the firm would move abroad would there be a net loss.
I think part of the trouble is that tax rates are very different across different states. If the US were to ban all state and local tax incentives, then that would very much hurt high-tax states, as they'd then have fewer tools left to compete with low-tax states in attracting businesses.
It seems insane that US corporate tax law isn't a bigger issue in this upcoming presidential election cycle.
Companies like Google and Apple constantly take advantage of US/EU/wherever tax laws to pay the least amount they have. I don't particularly blame the companies because they are taking advantage of laws that currently exist, but something needs to be done to simplify the tax code to avoid loopholes like this.
No, if you have mega corporations build entities outside your tax code, you have a case of countries having designed very attractive tax codes for corporations. Small countries especially have an incentive to do so, as a smaller percentage of tax of a larger percentage of capital going through their country counts for a lot per capita.
As companies benefit from this incentive, they lobby to keep it around. Very successfully.
So no, revamping the US tax code is (quite obviously) not an answer to Apple not paying tax in the EU. Having enforced taxation rules that prevent the race to the bottom is. Unfortunately taxation is not in the remit of the EU at the moment. Hence the back door approach through "unfair tax benefits".
We don't need trade deals that harmonize things so countries can, we really need tax deals that harmonize, or at least put minimum standards on taxes.
Why wouldn't something like that fly? Well because if the impression European observers have gotten over the last years is correct, then Apple et.al. basically own US policy on that point, to such a degree that the US actually threatened the Commission against ruling as it did.
So no, Apple did nothing illegal, but what is happening is clearly wrong, and Apple is lobbying to keep it that way. Heavily and successfully. And that is wrong.
For an example of an ethical stance a corporation could take here: IBM was, at least for a while, lobbying for abolishing software patents while at the same time owning a massive amount of them and registering new ones.
A structural fix would be to work towards making the US (and the EU, and all other) political system more resilient to lobbying pressure from powerful corporations.
But that is about as hard a problem as you are likely to find.
Oh wow, if we did that, then the EU and much of Asia would follow in retaliation. So companies operating in the USA would have to pay taxes to the USA, China, the EU, on all their worldwide income, insane.
Let’s not forget the problem that not all tax systems are very compatible, they all define income differently, some of them rely more on taxes that aren’t income based.
I don't have a problem with this. US companies haven't been bringing foreign revenue home because the tax rates are too low in other countries. If EU taxes them then they'll bring the revenue home.
But the US can't just block offshore companies from its market without absolutely destroying its economy.
What do you think would happen if the US suddenly decided that no company can do business in the US without paying taxes to the US for their offshore profits?
Why can't we get these kinds of policies in the US? Is it because Europeans are banding together to poke at us? I feel like they're doing this against us, even though we don't profit much from these tech companies bc of their tax dodging. Who are they winning against? Are we winning? Whats going on?
The problem lies in the fact that the US is all about free trade. They don't want to do that. You can't have it both ways.
Situation one: I'm a US company, expanding abroad. I acquire foreign competitors, and build a global company. I'm taxed on every dollar (profit), since I'm a US (holding) company.
Situation two: I'm a European company, expanding abroad. I acquire a US competitor, and build a global company. Since I'm a foreign company with foreign shareholders, the US can't tax my global income (obviously)
This means a US company will be at a significant disadvantage to a UK/Swedish/Belgian company competing in the same market, because, even if their results are exactly the same, their after tax income will be significantly less.
This also means that a US company bidding for a US competitor will be able to pay less than a foreign company buying up US companies, because they can achieve less/lower (tax) synergies.
It's not a question of picking a home country. If you operate in the US, you're subject to US laws. Give companies the choice of not operating here in the US at all or paying (at least) the US corporate tax rate on all profits either by paying the US or by paying some foreign government (which with double taxation would be credited towards US taxes owed).
Imagine if the EU also did this. It would go a damn long way to ending this absurd practice of offshoring profits.
It's about time that something is done about taxation. It can't be that US companies earn billions of dollars in EU nations but pay almost no tax (either in the EU or the US).
As a simple employee I cannot evade taxes (and might have to pay double taxes in the EU and US if I am a US citizen/perm resident working in the EU), yet large corporations can.
> The government has made halting steps to change the rules that let multinationals shift income overseas. In 2009 the Treasury Dept. proposed levying taxes on certain payments between U.S. companies' foreign subsidiaries, potentially including Google's transfers from Ireland to Bermuda. The idea was dropped after Congress and Treasury officials were lobbied by companies including General Electric (GE), Hewlett-Packard (HPQ), and Starbucks (SBUX), according to federal disclosures compiled by the nonprofit Center for Responsive Politics.
The issue is that the US (like many countries) has the best tax code money can buy. The US has the additional problem of dual sovereignty such that the states are competing with themselves to offer tax breaks to lure in companies and thus jobs.
Companies are like water: they seek the lowest level. They're not immoral, they're amoral.
A hideously complicated tax code is going to have holes in it so simplify, simplify, simplify.
From the perspective of the US this is an argument against corporate taxes. There is a global corporate tax race to the bottom and some European countries are taking advantage of that.
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