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New Global Plan Would Crack Down On Corporate Tax Avoidance
HughPickens.com writes:
Reuters reports that plans for a major rewriting of international tax rules have been unveiled by the Organisation for Economic Co-operation and Development (OECD) that could eliminate structures that have allowed companies like Google and Amazon to shave billions of dollars off their tax bills. For more than 50 years, the OECD's work on international taxation has been focused on ensuring companies are not taxed twice on the same profits (and thereby hampering trade and limit global growth). But companies have been using such treaties to ensure profits are not taxed anywhere. A Reuters investigation last year found that three quarters of the 50 biggest U.S. technology companies channeled revenues from European sales into low tax jurisdictions like Ireland and Switzerland, rather than reporting them nationally.
For example, search giant Google takes advantage of tax treaties to channel more than $8 billion in untaxed profits out of Europe and Asia each year and into a subsidiary that is tax resident in Bermuda, which has no income tax. "We are putting an end to double non-taxation," says OECD head of tax Pascal Saint-Amans.For the recommendations to actually become binding, countries will have to encode them in their domestic laws or amend their bilateral tax treaties. Even if they do pass, these changes are likely 5-10 years away from going into effect. Speaking of international corporate business: U.K. mainframe company Micro Focus announced it will buy Attachmate, which includes Novell and SUSE.
For example, search giant Google takes advantage of tax treaties to channel more than $8 billion in untaxed profits out of Europe and Asia each year and into a subsidiary that is tax resident in Bermuda, which has no income tax. "We are putting an end to double non-taxation," says OECD head of tax Pascal Saint-Amans.For the recommendations to actually become binding, countries will have to encode them in their domestic laws or amend their bilateral tax treaties. Even if they do pass, these changes are likely 5-10 years away from going into effect. Speaking of international corporate business: U.K. mainframe company Micro Focus announced it will buy Attachmate, which includes Novell and SUSE.
General forms of taxes are legalized theft anyway. When the government just takes money away for their "general bucket", it is nothing more than stealing.
Instead, tax-per-use: road tax, school tax, environmental tax, so the tax-payer knows what happens to their money.
If governments would be more transparent, less people would have problems paying taxes.
I'm not a complete idiot... Some parts are missing.
Why tack on the Micro Focus news? That is news all on its own and only remotely related to this topic.
There are other ways to generate more tax revenue from business operations in the US: quit making elsewhere so much more attractive. The US has the second highest effective business tax burden in the world (second only to the United Arab Emerates, which mostly taxes foreign oil operations). Gee, I wonder why businesses born in the US look to mitigate that in whatever ways the law allows. If the law no longer allows it, there will simply be more companies actually moving, entirely, to places with a lower burden. Then the government will still miss the revenue, and they'll miss all the tax revenue they're already getting on the income taxes levied on and other economic activity generated by all of the company's current domestic employees, partners, vendors, service providers, etc.
Don't disappoint your bird dog. Go to the range.
the tax thieves aak "regulators" make new rules. Why not put some thought into changing the tax codes to be on a par wtih Ireland, Switzerland, etc instead of trying to preserve the high tax state?
A company has to convince people to hand over their resources.
A government just decrees its income under threat of violence.
"The US has the second highest effective business tax burden in the world"
Wrong. The U.S. has the second highest nominal business tax rate in the world, around 35%, but thanks to loopholes and other tax breaks no business pays that rate, instead it is less than 15%.
"I wonder why businesses born in the US look to mitigate that in whatever ways the law allows"
Wonder no more, businesses _everywhere_ reduce costs of all kinds in whatever legal ways possible including offshoring revenue and relocating headquarters. This is far from unique to the U.S. except that our laws accomodate offshoring/relocating more than a lot of other countries.
"there will simply be more companies actually moving, entirely, to places with a lower burden"
Bullshit. Companies will not simply drop out of the biggest market in the world just because they don't want to pay any tax at all.
They will still get rich, just not as rich as they might have otherwise.
You are way off on this.
First,
It takes advantage of weakness in Irish law that allows companies to not pay taxes on subsidiaries that are outside Ireland.
IIRC, the US, Ethopia, and Eritrea are the only countries that charge taxes on foreign subsidiaries, so it is not a weakness exculsive to Ireland. And if you think about it, it is rational not to tax the foreign subsidiary. If a profit is earned in country X, country X shoudl get the tax. If not you get the complex and ineffectual of the US.
Second, what you are talking about about abusive transfer payments, not about the "Double Irish", which this treaty is trying to fix. Ireland is not some great "loop hole", just low taxes. And by "Double Irish" I think you really mean the "Double Dutch", which requires a Irish and Dutch subsidary - they recognize income differently. This is, since they have different standards on when to declare income from whom they can structure income so it is never recognized by the tax authority. That is a true loop hole.
Fundamental question with what should be a simple answer. We pursue enterprise to benefit ourselves and profit. Not to serve as revenue generator to the state. The state is supposed to serve the people; not the other way around, but we keep coming around and forgetting the lessons of history and the basic nature of man.
If the state were not exceeding its mandate to serve the people, taxes would be acceptable and nobody would put that much effort into avoiding them because their result would continue to appeal to our interests. But there's never enough money for the state to be all the things it is promising to be, so the states are inventing structures for self-preservation of systems fundamentally doomed to fail.
"Now, I doubt any of you would prefer a rolled up newspaper as a weapon against a dictator or a criminal intruder."
The companies involved also PAY for the campaigns and prostitutes for the "elected" officials. So this supposed "crack down" will never happen. In point of fact these tax dodges were created by and endorsed by said "elected" officials.
Corporations are just tax collectors for the welfare state. Corporations don't pay taxes, people do either through lower wages, higher prices, lower dividends or lower returns.
Don't get fooled by the slight of hand here when the authoritarians just want more money to fund their own power and lifestyles.