This is such US-centric thinking.
Foreign companies never even started in the US, so there is no question of them "leaving" or "paying their fair share". If US companies are going to be competitive, they have to get out. Otherwise, investors will just choose non-US companies. It's better to set up overseas to begin with, and save the trouble.
Same thing with the US taxing citizens living abroad (unlike other countries). And so the IRS sticks its nose into every single financial transaction in the world in order to get money it doesn't deserve.
The US government should just stop being so greedy and entitled.
Well there's a few things here.
1. Company directors have a duty to maximise profits.
2. Companies have no obligation to maximise, and every right to minimise, their taxes.
3. The USA has one of the highest corporate tax rates in the world, including double taxation of repatriated earnings.
Is it any wonder companies are voting with their feet?
The more you rely on US exceptionalism, the more you place it at risk. If you tie taxes to residency of officers, they'll start moving to the Bahamas, Europe, Australia, Singapore and the like. You'll turn yourselves into a branch office. Good luck with that.
"Almost everybody is in Ireland," Sullivan said. "All the pharmaceutical companies, all the high tech companies. You're stupid if you're not in Ireland," he replied.
And this is why it doesn't change These big companies are telling everyone, the US public, the Irish public, the Irish government that the low tax rate works. The goal of the low Irish corportion tax is exactly this. Create job in Ireland, bring companies to Ireland.
(Ireland is currently almost bankrupt and needs an IMF/ECB loan. Everything is on the budgetry chopping board, income tax, vat, new property taxes, reductions in capital spending, reducing number of teachers per student, delaying the age at which children start school. Everything. Except the 12.5% corporate tax rate, the government parties (a centre left and centre right) view it as that important.)
Accompanying text: http://www.cbsnews.com/2102-18560_162-20046867.html
Serious question; What's the difference between price fixing and tax harmonisation?
Of course Google, Microsoft et al were telling Ireland the other month that they couldnt raise their rates or they would leave. There is too much power here. Aligning tax rates globally will be necessary, like the EU did in Europe.
On the other hand if GE is paying 3.6% then some loopholes need closing. Remove the ways to avoid tax and you can cut the basic rate. That was the plan for the abortive Reagan tax simplification.
Governments are too weak for all the pork barrelling loophole generation and then get screwed by this type of evasion. Drastic tax simplification should be back on the agenda, but is as unlikely as ever.
Speaking of low taxes, I think US companies are overlooking Turkey and the advantages it offers to tech companies.
1) no corporate tax 2) no income tax for employees
All that is required is for the project to be approved as an R&D project. There is an incredible talent pool, solid infrastructre and a beautiful city waiting...I am just saying...:-)
I think this 'tax amnesty' borders on extortion. So all these companies used every loophole they could find to pay lower taxes, and now they want to bring the booty back, and it has to be for free. Assuming this happens, what prevents them from doing the same thing again?
There is a lot of loaded language in that report, and I got the feeling that the reporter should have taken an economics class before doing it. It was like watching a ignorant economics student get lectured about reality and she not wanting to accept any of it.
So, instead of pulling down a bunch of theory from the shelf and going over it, I'll just point out the obvious flaw: she believes that the country "owns" all the businesses inside of it and that by the companies acting in their own best interest, somehow they are cheating the rest of us. Most folks who have really thought about this realize that everybody acts in their own self interest and that government's role is to set things up so they grow and that a reasonable amount of money can be harvested to help fund things. At times it sounded to me like she wanted the country to be a prison: set up shop here and you can never go abroad. Paying a tax lawyer to make the best moves for your company was cheating. Etc.
I am deeply troubled that people are using mental models of business that look at businesses like the corner shopkeeper when business doesn't work like that anymore. Business is increasingly location-independent. Ranting about how unfair all of this is? It's not going to change that fact. It's 2011. I can live in Aruba, have corporate offices in Switzerland, have officers scattered around the world, make things in a dozen countries, market on the net, and sell in a hundred countries. You're using a mental model that doesn't match up to reality. You'll never make progress like that.
Never once did she mention that the United States double-taxes income where no other country in the world does - a critical part of the entire discussion. That omission alone should tell you how well-researched and thoughtful the piece was.