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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.
That Novell and SuSE start paying the billions of taxes they owe.
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.
For those that were unaware, this is my explanation (it should be mostly correct)
double non-taxation, otherwise known as a "Double Irish"
It takes advantage of weakness in Irish law that allows companies to not pay taxes on subsidiaries that are outside Ireland.
So a large multinational corporation, located the United States, needs to subsidiaries for this to work.
They open one subsidiary in Ireland.
They open a second subsidiary in a low, or no tax country like Bermuda.
The Irish company owns the Bermuda company.
The Bermuda company owns the US Companies IP rights for outside the US.
The Bermuda company licenses those rights to the Irish company.
The Licensing fees the Irish company pays to the Bermuda company are as close to 100% of the profits the Irish company makes as possible. Everything over that amount gets changed at the Irish corporate rate of 12.4%
The profits all get transferred to the Bermuda subsidiary where there are no corporate taxes. So they avoid all taxes on that money and other governments can't come after them because there are treaties between most countries that prevent them from charging a company based in a different partner country for taxes. This is to prevent situations where you'd pay taxes in both countries for the same money. Bermuda isn't a part of those treaties but Ireland is. So this loophole in Irish law is upending the entire Global tax system.
1) If a country is owned by more than 50% by citizens of X country, then it must pay taxes on all it's profits of the entire world, under Country X's laws.
2) (This one I really like) If a company is not incorporated and paying the majority of it's taxes within a country, than it can not under any circumstance: A) lobby in that country, or in any way attempt to affect legislation or rules of that country B) nor can it t make any political - monetarily or directly - on any political subject for the 8 months preceding any primary or general election.
excitingthingstodo.blogspot.com
Taxes on businesses and profits are taxes on:
(1) Wages, pay and conditions
(2) Investment
(3) Employment
I think all taxation should be personal taxation; that a business should not be classed as a person for legal purposes and that no taxation should be levied on industry or business at all.
That should enable the tearing up of what in the UK is a 10,000 page tax code, most of it concerning various bribes, shakedowns, let-offs and special cases for businesses. I think if you can't make a tax code that can be written on one side of a piece of A4 paper, you're probably being paid by the hour to write it.
I'll just leave this right here. Seems relevant before we get more stupid than we already are.
Oh my, changing things is complicated and doesn't always work?
No, but seriously, you're wrapping a clear possibility in a blanket of cynical forgone conclusion.
Governments aren't actually interested in no one collecting taxes on their corporations.
"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.
About time this happened.
Next up: removing tax exemptions and tax exclusions for corporations.
Corporations aren't People.
People pay taxes and go to jail.
-- Tigger warning: This post may contain tiggers! --
No one has the intention to build a wall.
Really, this system only works in a totalitarian system. In democracies you first must get the parliament vote for a wall, then the president must sign the wall act, then the law can be excercised. By then everybody who can walk is out.
The sad fact is they'll do anything to protect their bottom line, so they'll just pass the extra cost on to their customers, who in many cases will not have any choice but to pay more for whatever they're getting. Then the corps will blame the government for it's 'corruption' as the reason their prices are so much higher now, and lobby for 'reform'. Or somesuch scenario.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
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.
So now where are corporations going to get their Dutch Sandwiches?
Time to offend someone
This is why we invented surface-to-air missiles.
I write sci-fi for metalheads
Stuff that's made in China and sold at Walmart would be taxed differently? I'll believe it when I see Chinese manufacturers paying the US 35% tax rate.
If the US, the most developed country in the world, with all its advantages of a functioning economy, education system, infrastructure, mineral and agricultural wealth, moderate climate and fundamental rights, cannot compete with the rest, things have come to a sad pass. The America war cry goes up "It's not fair!" and the kind of corporate shenanigans we deplore are now to be deployed on a global scale - protecting a doddering and clueless incumbent from the nimble upstarts, to the detriment of the common man.
Prove anything by multiplying Huge Number times Tiny Number
Corporations can do whatever they can to show no profit, and therefore, no taxes.
If rich people were to try to make enough charitable contributions or whatever other deductions to drop their taxes to zero, they'd still get hit with the Alternative Minimum Tax. (those with a low enough income can still get away with this)
Why don't we have an AMT for companies? A sort of 'if you're making over a billion dollars in gross receipts, you still have to pay the U.S. 10%' or simply 'then these deductions aren't allowable' ... you could have things in there like :
Obviously, lobbyists and legislators will hate the first one. Newspapers & TV stations will hate the second one.
Build it, and they will come^Hplain.
Walls can't be built higher than corporate jets can fly.
That's what drones are for
-- Tigger warning: This post may contain tiggers! --
If by 'corporate tax avoidance' you mean 'full compliance with all tax laws' then yes, corporations do that all day.
This is not a problem with corporations avoiding taxes; technically speaking they are not avoiding anything. This is a problem because tax law is so hilariously complex that there will inevitably be the so-called loopholes, (which are really just inevitable artifacts of any sufficiently complex system), and corporations with a lot of money will hire a tax-evasion-expert (also known as a tax-compliance-expert) to do exactly that. They will follow the letter of the law and use every scrap of genius to minimize their expenses.
Simplify the tax code; this problem will solve itself (this is at least true in the United States). Multinationals have a different problem, but that is simply the nature of all international laws.
How do you "crack down on" people following the rules and doing exactly what is best for them, paying the least amount of taxes?
Corporations do not pay taxes. They simply pass along the money from consumers to the government. Got it?
Raise the taxes for XYZ, Inc. and the price of their goods or services will go up accordingly.
Bitcoin won't stop us from dragging the rich from their palaces and putting them to the sword.
I write sci-fi for metalheads
Ireland wants to charge its businesses 10%. Fine. Let them. A business in Dublin pays the Irish government 10% on all the profits it makes from revenue received from customers who shop there. Whether they are Irish, Canadian, American, French, whatever.
So if an American buys their products, they pay that 10%. To the Irish government. And they don't pay diddly to the USA. If our Congress doesn't like that, they can take it up with the US citizens who travelled overseas and spent their money where the government take is less. Or they can just keep them the hell out of Ireland. Good luck with that. The last people who built a wall tore it back down in 1989 (Sorry, the second to the last. I forgot Israel).
Have gnu, will travel.
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.
VA and officer pensions are not into the Military budget as they should be to do the comparison. War operations for whatever illogical reason are also not in the Military budget. And SS actually mostly pays itself, how can you possibly compare it to the various spending budgets, when it is not exactly "spending"? Please tell the truth.
Let me break this down. My company is small because Microsoft charges me way the hell too much for Windows licenses on my custom-built computers. I can't compete with the $45 or so license cost given to Dell, which is given to them because they're big. So I stay small because Microsoft is keeping me small by charging me unfairly. My additional income from licenses I buy from them lets them get big enough that they can pay less in taxes so I in turn have to pay more in taxes at my US business because I can't afford to operate it out of a foreign country because they're purposely keeping me small with the price difference excuse of the fact that I'm not big. Thanks, assholes.
The perfect example of this is the tax on dividends which should be exactly the same rate as other income, but it was argued that it was already being taxed as corporate profits so the rate was set lower. The perverse effect is that people that actually make a wage or salary would pay higher income tax rates compared to those who can shift their income to dividends.
Hey, can we maybe put some effort into cracking down on government spending, too? I mean, it has only been like 240 years. Maybe it's about time we finally do some snipping?
Problem will quickly solve itself.
No, we can't have that. What would millions of "public servants" do if we run out of problems?
The state thrives by it's own incompetence. Let's take welfare:
Before the state was involved, private charity was taking care of the poor: And poverty actually declined! In the 19th century the society went from "on the edge of starvation"-poverty to "not being able to afford a car"-poverty. Nevertheless the "progressives" decided that the poverty is unbearable and that the state had to solve the problem. After half a century after the "New Deal" and more and more welfare laws the US has been effectively transformed into a welfare-state. And poverty did not decline, it rises! While the free society created a strong middle-class that dominated society in the second half of the 20th century, the welfare-state has created a society dominated by bankers and billionaires.
But the state thrives by it's own failures. And the failure of the welfare-state is just an argument for MORE of it - and so it will go on until the whole thing collapses like the Soviet Union.
But it'll stop you from getting their money.
Change is certain; progress is not obligatory.
Say a global company makes 9bil, but 3bil of that is from your country. Then assume 33% of their net pre-tax profit is to be paid in taxes, but have taxes paid to other countries as tax deductible. So the only real way for a company to get out of paying your country taxes is to pay taxes in another country. Also, assume that all forms of direct government subsidies a "tax deduction" from other countries. In case a government tries to "feed back" money paid to effectively reduce taxation.
Your statement makes no sense. How can I "shift my income to dividends" exactly?
Double taxation refers to this: I get paid $1,000. I paid taxes on that. I put it in a savings account. I get $10 in interest. Taxing that $10 is double taxation.
Murphy was an optimist
Can't be true! I mean, their moto used to be "Don't be evil." Easy peasy!