Slashdot Mirror
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.
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
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! --
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.
I don't think that you understand capitalism. The companies that will be affected (and indeed, every for-profit company, everywhere) already charge the most money that they can. I know some customers would theoretically pay more for any given item, but each company charges as much as possible for its products, regardless of its costs. If I own a company that makes a widget for $80 and can sell it for $100, I'll do that. I won't sell it for less because it would still be profitable. On the other hand, if my costs increase to $90 per widget, I can't suddenly charge $110 for the same item and keep the same level of income. Some customers, maybe even most, will stop buying the widget. If these companies now have to pay more taxes, many will move out of the higher-taxing countries completely, and some may just fold. Sure, some could probably afford to pay more taxes and still be profitable, but it certainly won't make their shareholders happy.
I don't want to achieve immortality through my work. I want to achieve it by not dying. - Woody Allen
Companies use infrastructure to deliver goods to their customers ... Companies benefit from local education systems to provide knowledgable people (arguably).
But the company doesn't do anything with the money except spend it on growing the company, or in compensation to employees and investors. When those investors or employees take money home from the company, it's taxed. And if those same people take that already taxed money and invest it that or another company, and it makes money, they get taxed again.
The company doesn't benefit from services and education, etc., the people WHO TAKE HOME THE MONEY do (at which point it's taxed). They other group that benefits are company's customers, who spend money (on which they've already paid other taxes) to buy goods or services from that company. And that means nothing until, again, somebody takes it home as pay (taxed) or dividends (taxed) or cashed out stocks (taxed).
The company's actual profits shouldn't be taxed because all that money does is sit there until somebody either spends it on the company as reinvestment (which isn't taxed anyway), or it gets turned over to somebody designated to receive it - at which point it IS taxed as income.
Don't disappoint your bird dog. Go to the range.
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.
Certain country's tax codes are upending the world trade structure.
http://en.wikipedia.org/wiki/D...
http://en.wikipedia.org/wiki/D...
The way things should work: profits made in a country are taxed in that country.
The way things should not work: a company doing business abroad pays taxes both at home and abroad.
The way things break: subsidiary company makes "no profit" (no tax) because it pays hefty license fees (100% net income) to my headquarters company in Ireland. Ireland does not tax licensed technology abroad. I pay effectively no taxes (and instead pay clever tax accountants, who are cheaper).
This is an article is an attempt to remedy the situation where companies can chase low tax structure to literally any country which will offer a favorable deal. It is understood that you can't do it one at a time ("we'll just fix Ireland because they're the problem"), because there are many countries willing to offer such arrangement (Bermuda, Curacao, Panama, Iceland, etc.). This is an attempt to get to the 1st and 2nd point, while disallowing the 3rd.
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.