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.
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.
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.
I don't see how taxing foreign income would work. A corporation would just spinoff foreign business to avoid it. If you tax those it'd just reincorporate offshore. The USA simply can't tax the foreign income of a foreign company.
Everyone here seems really in favor of this move. To me it sounds incredibly imperialistic. Why does the USA get to bully the rest of the world into their tax rates?
We clearly have a problem with multinationals leaving the country and not paying taxes. There are plenty of ways to solve that domestically without calling for some globalist tax regime.
What’s more likely: we end up with a more fair tax system, or a tax system written by the USA that looks like the USA?
Apple pays lots of taxes in the US. It doesn't pay US taxes on money earned elsewhere. Can you articulate a sound policy for why any global company should be required to pay taxes in the US on revenues earned elsewhere? Why shouldn't the U.K., Germany, France, Japan, Korea, and China do the same?
I think it is a double standard that US companies get to avoid taxation worldwide while US individuals have to be taxed on worldwide earnings (regardless if it was earned in the US).
To me, it's insane that the US government feels that this is reasonable.
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.
This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in.
Well, tax them on the money they make from EU sales then. I hardly see why the EU has a claim on revenues made by overseas companies on non-EU citizens. How about the US levy a tax on global BMW and Benz revenues?
The companies are in many cases doing things like this:
1) their revenue they classify is centered in a different country like Ireland
2) they setup a massive line of credit with an international bank
3) they take out massive loans against the money they have “overseas” that is not taxed
4) they then pay the buybacks and other things to their investors with that loaned money in US
5) they then pay back the bank at their international site
6) the bank then borrows more money from federal reserve at nearly zero interest rate
Rinse and repeat.. tons of companies have done this. So sure some investors will eventually cash out but companies should also be taxed if they derive some benefit from the country they are from or selling products. I would argue those taxes should be low but allowing companies to totally dodge them seems like a bad setup long term.
That -sounds- simple, but it isn't, and in reality any company would easily bypass that by simply creating other companies to take some of the revenue. They already do that to avoid international taxes. As an example, the US charges tax on all income coming to a US company so companies have entities in countries like Ireland and Luxembourg to keep that money out of the US government's reach.
So Apple might have $100B stuck in Ireland, unable to bring it to the US, but it doesn't matter, that money still counts for their shareholders.
And it's the same thing here. If you try to tax $10B they'll just have 100 companies all making $9.9B/yr, in a variety of different countries, completely separate from each other, and you're back where you started.
And while this would be extremely complicated/expensive for them to manage, it'd be profitable because the alternative is to get a 100% tax on those profits.
Taxes aren't easy. And calling a company that sells phones a "society-destroying problem" is a bit hyperbolic, don't you think?
Corporations being able to book their profits wherever they find it most convenient to book them, is utterly unreasonable. They make their profits in specific markets, and should be paying their taxes there. Profits made from selling in the US should be paid in the US, profits made from selling in Germany should be paid there.
The problem is, profits are the end result of a lot of complex corporate operations across many countries. Who's to say which bit of which revenue was used to pay for which costs, while other bits are pure profit?
There is another corporate tax that is entirely linked to the market they're selling to, though: VAT. The problem is: it's only over revenue made from selling to consumers, not to other businesses, and it's always completely offloaded to those consumers, and therefore not really a corporate tax but a consumption tax.
So how about treating profits that way? In every market, you count the revenue made from selling in that market, and subtract the costs made by buying, hiring, etc in that market. The difference is the profit you made in that market, and you've got to pay your corporate tax over that amount to the tax authority in that market.
That way you can't book your profits in a country where you didn't make any revenue. And if somehow you do make your revenue in a country where you didn't make incur costs, you pay tax over the entire amount. If you don't make revenue, then tough. You could have made some tax-free revenue there.
I'm no international tax lawyer, though, so there are probably problems with this idea. I like the principle, though: they've got to pay back to the market they're profiting from, and not to a completely unrelated country that offers them tax breaks for coming there.
I see your objections. My idea is you could base it in the US possibly or have more than one and have them just work out the global earnings using GAAP and apportion it to the various countries by how much they sell there so you get a earnings figure for each country. The countries could then use that to come up with a tax demand at their chosen rate and the company could either pay up or face sanctions in that country. So it doesn't require anything like a world government, just some accounting and possibly trade agreements.
We could probably just stop trying to tax people in those other countries and they'd be happy enough to forget about the corporate tax thing, speaking of stupid US tax policies.
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.
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