USA needs to tax companies that are headquartered in tax havens, to ensure that those companies can't enjoy less than 15% global taxes. I don't think that USA is doing that right now.
I'm still yet to hear why a US company should pay tax on revenues earned outside the US. This goes for Google and Microsoft too. What has the Federal Government done to earn the tax?
Companies already get to reduce their US tax by the amount of tax they paid a foreign government. The issue here is that that they've moved the profits to places where little or no taxes are paid at all. This is not about double taxation.
What does a proper job of taxing US corporations look like?
Currently, US corporations have a minimum tax of 10% on global income or 20% on US income; sounds like the numbers are proposed to change to 15% and 28% (or something; NYT paywall is loading too fast today, and it's a proposed law so the details aren't set and not worth fighting over); and the US is saying hey, these guys are going to pay 15% on income from your country, you may as well have them pay it to you instead.
The AMT on global income was part of the Trump tax changes, and is a departure from the full corporate rate on global income, but only due when/if money made it back to the US.
I imagine a next step would be charging multinationals headquartered elsewhere but operating in the US the AMT on their global income. That's kind of far reaching though, so if they can get a few major countries on board instead, that's better.
Could the US simply impose a tax on all corporate profits, including international profits, for any company with any sort of nexus or business activity in the US? US citizens are basically already treated this way as individuals.
I imagine it would allow the rate to be drastically lower since the tax base would be so much larger. And while megacorps would obviously grumble, it would still be a profitable decision to pay the tax and remain in the US market given how lucrative it is. It would end all these country-to-country shell games once and for all, and would also provide some natural advantage to smaller homegrown companies that haven't gone international yet.
I don't understand one thing about us tax law. US corporations avoid paying taxes by using forieng subsidiaries where as Americans are still taxed despite the fact that they are not even living in the US.
They are. The US taxes companies on profits made abroad. The issue is that these taxes are only collected when the money enters th US, so companies park this money abroad.
They could easily make laws about how much tax a company has to pay in the US if it wants to do business and earn revenue/profits in the US, regardless of where it's headquartered.
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.
What needs to be done is change the unique incentives for American companies to participate in such byzantine international tax avoidance schemes in the first place. The US is practically the only country that taxes profits internationally regardless of origin. It should remove all taxes on bringing foreign profits into the US and lower the overall corporate tax rate while closing the loopholes that render the 'headline rate' so ineffectual in the first place.
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.
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