
How to Stop Turning U.S. Corporations into Tax Exiles - hvo
http://www.nytimes.com/2015/12/14/opinion/how-to-stop-turning-us-corporations-into-tax-exiles.html?hpw&rref=politics&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well
======
princeb
I am trying to think of companies that should rightfully repatriate cash back
to the states, and companies that should not.

Why is it that it is repulsive that Google or Apple chooses to keep their cash
overseas, whereas it is fine for Budweiser to do so (ignoring magnitudes for a
second)? Because AB Inbev is Belgian? This is a difficult example for me to
think of, because the US is one of the interesting countries where the largest
companies here (or globally) are almost always American too.

But let's imagine for a moment that there is a company called Apple Inc that
only does business in the US and nowhere else, and there is an unrelated
company in France called Pomme SA, and another unrelated company called Apfel
AG in Germany that happen to sell identical iPads and iPhones. Do they have a
duty to transfer cash to each other and their jurisdictions? What if the CEOs
of these companies travelled and met each other and went, "oh! we did not know
it but we sell the same thing, let's share resources in some way", which
country has a right to collect tax on the revenue of the new global
organization?

The real debate is really about fairness in transfer pricing (which is
difficult if not utterly boring, because typically transfer pricing are for
services that are not fungible or even exchangeable in arms length markets,
and so the debate within tax jurisdictions are over the nitty-gritty
"economics" of the transaction in addition to consideration of foreign tax
obligations yadda yadda yadda _yawn_ ), and this tax evasion through scary
financial structuring like "inversion" is a really catchy thing to publicly
excoriate, but it's probably not the right concern. So this is kind of a
stretched example.

The point I am getting at is that many American companies aren't 100%
American, and it doesn't seem like there is a good reason for insist that all
foreign earned cash (from Apfel and Pomme) to be brought back to the US. I do
not agree that a company like (say) Royal Dutch Shell, being one of the
largest oil companies here, should repatriate cash into the US, and
unanimously most of us don't think so, so this is not really the problem we
should be getting angry about.

~~~
pzone
If these tax laws incentivize productivity-destroying mergers then they are
utterly moronic, immoral even. The Pfizer CEO said he wouldn't do it but for
the tax savings.

All these companies want to do is bring back their cash to the US and pay
their US shareholders. It's fair and defensible for Pomme to want to bring
cash to France to pay its French shareholders, and for Apfel to bring it to
Germany to pay its German shareholders.

~~~
wavefunction
These companies are free to do so. They just need to pay their taxes.

~~~
pzone
Or as an alternative, they can invert! It really does save a lot of money.

------
blisterpeanuts
Almost more interesting than Icahn's common sense article are the many
talkback comments from the New York Times readership, most of whom appear to
be bitterly opposed to corporate activity which maximizes profits.

Has the NYT become a haven for left wing advocacy, Icahn's capitalistic
perspective notwithstanding, whose primary readership are socialists? How much
of the country do they represent?

I worry about our economic prospects when a significant chunk of the
intelligentsia no longer believe in free market economics.

~~~
seivan
I get the same feeling, and it's pretty much not isolated to just NYT.

------
deciplex
Is the end to double taxation for the corporate tax only? Human Americans are
also double-taxed on income earned abroad.

~~~
pzone
Yes. The reason is that corporations vote with their feet quite readily, as
seen here.

~~~
gozur88
People would vote with their feet, too, except they're heavily penalized for
doing so. If you renounce your US citizenship there's a one-time tax of 40% of
your all your US assets and the US claims the right to tax you for the next
ten years.

Subjects, not citizens.

------
adventured
For reference, statutory corporate tax rates by country (PDF):

[https://www2.deloitte.com/content/dam/Deloitte/global/Docume...](https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-
tax-corporate-tax-rates-2015.pdf)

~~~
pzone
Important part: middle column, where the rate is basically 0% everywhere
except the US, where it is 30%.

~~~
lazyjones
Why is this the important part? It's not 0% in Austria as listed, it varies
too (in Vienna you pay tax for subway infrastructure, among other things).
It's the sum that matters, including exploitable loopholes such as trusts and
holdings (AFAIK, in Switzerland, a pure holding pays no corporate taxes).

------
leereeves
> Congressional leaders agree that passing legislation according to [the
> Schumer-Portman] framework would stop inversions

Until another country offers an even better tax deal to attract multi-national
corporations.

~~~
cmdkeen
Not really - there are benefits to being based in the US. If everyone just
chased the lowest taxed jurisdictions then every corporation would be based in
a tax haven.

Corporations aren't repatriating the money they hold offshore. I can see why
the US wants a piece of that pie, but they currently aren't getting any pie
and are losing piemakers. Taking a smaller cut of something whilst also having
that something flow back into the US is surely a good thing.

~~~
icebraining
> Corporations aren't repatriating the money they hold offshore.

Indirectly, they are: "Nearly Half of So-Called “Offshore” Funds Already in
the United States"

 _Earlier this year, a survey was sent to 27 U.S. multinational corporations
and found they held more than half a trillion dollars in tax-deferred foreign
earnings at the end of FY2010. The survey also found that 46% of those foreign
earnings – almost $250 billion – was maintained in U.S. bank accounts or
invested in U.S. assets such as U.S. Treasuries, U.S. stocks other than their
own, U.S. bonds, or U.S. mutual funds._

[https://www.hsgac.senate.gov/subcommittees/investigations/me...](https://www.hsgac.senate.gov/subcommittees/investigations/media/new-
data-show-corporate-offshore-funds-not-trapped-abroad-nearly-half-of-so-
called-offshore-funds-already-in-the-united-states)

~~~
muzz
Yes, an important but never-mentioned distinction is that "offshore" is
basically an accounting designation, and that money is not somehow prevented
from being put to work in the US.

------
brandelune
Such a pile of crap, by Icahn, of course. Corporations do not exist in a
vacuum of social irresponsibility and their first duty is certainly not to
their shareholders but to the people they employ and to the societies they
thrive on.

~~~
apsec112
"Any one may so arrange his affairs that his taxes shall be as low as
possible; he is not bound to choose that pattern which will best pay the
Treasury; there is not even a patriotic duty to increase one's taxes."

"Over and over again courts have said that there is nothing sinister in so
arranging one's affairs as to keep taxes as low as possible. Everybody does
so, rich or poor; and all do right, for nobody owes any public duty to pay
more than the law demands: taxes are enforced exactions, not voluntary
contributions. To demand more in the name of morals is mere cant."

\- Judge Learned Hand
([https://en.wikipedia.org/wiki/Learned_Hand](https://en.wikipedia.org/wiki/Learned_Hand))

~~~
rmc
There's no legal responsibility on me to be nice to my elderly parents either.
Doesn't mean it's not The Right Thing To Do.

~~~
sokoloff
We legislate that you can't murder, torture, kidnap, or assault your parents.
What you do beyond that is up to your conscience.

Given that corporations are conscience-less entities, the de jure minimums
become the de facto outcomes.

