Corporations fleeing US to low tax Switzerland

[GG]

Link?

 

 

Here you go

[The Big Cat]

Here you go

 

So, by that link, I'll assume THIS is what you're referring to.

 

 

Seriously, can you please explain to me, in terms that someone with little to no prior knowledge of tax/corporate law would understand, why a company incorporated in what geographic region can justify reaping the tax benefits of another geographic location where it ISN'T incorporated? I have looked it up, it doesn't make any sense to me, this is a message board, a place where people come to get information from their peers, so now I'm coming back with the exact same question.

 

I mean, I understand you're aghast at my having opinions about things, but you can't just accuse me of being ingorant in one breath, then refuse to remedy said igonrance in another.

[ExiledInIllinois]

Yes, chaos always works. Especially if it has the side benefit of amusing you!

 

Now we are cooking with gas!

 

[PastaJoe]

And the jobs start leaving....

 

Fortunately, the U.S. built up a surplus of jobs during the Bush years due to the tax cuts for the wealthy who graciously didn't move any jobs out of the U.S. and created a plethora of new jobs. I mean, that's how trickle down economics worked, right?

[Chef Jim]

I'm the poster boy for only children. Make no mistake.

 

Poster boy for only children? Let me put it this way. If my wife had squeezed you out we'd still be childless.

[Chef Jim]

Fortunately, the U.S. built up a surplus of jobs during the Bush years due to the tax cuts for the wealthy who graciously didn't move any jobs out of the U.S. and created a plethora of new jobs. I mean, that's how trickle down economics worked, right?

 

Under which president did this country have the most consecutive months of job growth?

[The Big Cat]

Under which president did this country have the most consecutive months of job loss?

 

Since they started keeping records- I believe that would be GWB at 7? I could be wrong.

[PastaJoe]

Under which president did this country have the most consecutive months of job growth?

 

I don't consider hiring at Walmart while laying off at United Technologies "job growth". Apples and oranges.

[KD in CA]

I don't consider hiring at Walmart while laying off at United Technologies "job growth". Apples and oranges.

 

Ah yes...the old "they weren't the right jobs" excuse. Meanwhile, get out your pom-poms for every useless Gov't job created by the new administration that saddles taxpayers with yet another mouth to feed and rich pension to pay for.

[GG]

So, by that link, I'll assume THIS is what you're referring to.

 

 

Seriously, can you please explain to me, in terms that someone with little to no prior knowledge of tax/corporate law would understand, why a company incorporated in what geographic region can justify reaping the tax benefits of another geographic location where it ISN'T incorporated? I have looked it up, it doesn't make any sense to me, this is a message board, a place where people come to get information from their peers, so now I'm coming back with the exact same question.

 

I mean, I understand you're aghast at my having opinions about things, but you can't just accuse me of being ingorant in one breath, then refuse to remedy said igonrance in another.

 

You're asking the question in a wrong way. A company's incorporation determines its tax status. Thus, Coca Cola corp is a US company, but say Coca Cola AG is a German company that is 100% owned by the US company. Under the int'l tax laws, income is taxed in jurisdiction it was earned. Pretty simple for small companies, but very complex for large multinationals. It's fair for Coca Cola USA to pay US taxes, and for Coca Cola AG to pay German taxes. But I think you can agree that it's a bit unfair for Coca Cola AG to pay both US and German taxes, just because one company owns the other. If you taxed both, then there would be much higher risk for Coca Cola USA to open up overseas offices and sell its product there. So it would never open up the German operation.

 

To eliminate that, countries have treaties where each subsidiary is taxed at the local jurisdiction. US, however, adds a kicker that if you want to bring in cash from your foreign sub to the US, it gets taxed. Yup, it gets taxed again whether or not it was taxed already at the host country. So companies don't bring the cash back and park it overseas for years.

 

This riles up the do-gooders in Congress who campaign against Benedict Arnold corporations for depriving the US Treasury. But they never change the law, because they know it's idiotic. If the law is changed, the the US companies will simply spin off the international operations, and the US will be a net loser. But populists would have own their battle.

[Chef Jim]

You're asking the question in a wrong way. A company's incorporation determines its tax status. Thus, Coca Cola corp is a US company, but say Coca Cola AG is a German company that is 100% owned by the US company. Under the int'l tax laws, income is taxed in jurisdiction it was earned. Pretty simple for small companies, but very complex for large multinationals. It's fair for Coca Cola USA to pay US taxes, and for Coca Cola AG to pay German taxes. But I think you can agree that it's a bit unfair for Coca Cola AG to pay both US and German taxes, just because one company owns the other. If you taxed both, then there would be much higher risk for Coca Cola USA to open up overseas offices and sell its product there. So it would never open up the German operation.

 

To eliminate that, countries have treaties where each subsidiary is taxed at the local jurisdiction. US, however, adds a kicker that if you want to bring in cash from your foreign sub to the US, it gets taxed. Yup, it gets taxed again whether or not it was taxed already at the host country. So companies don't bring the cash back and park it overseas for years.

 

This riles up the do-gooders in Congress who campaign against Benedict Arnold corporations for depriving the US Treasury. But they never change the law, because they know it's idiotic. If the law is changed, the the US companies will simply spin off the international operations, and the US will be a net loser. But populists would have own their battle.

 

As an example we have a client, an American citizen, who owns a very large company in France. We're trying to figure out if he liquidates stock of his foreign company and then pays taxes in France, what is the tax ramification for when he brings the money to the US. There is a treaty but we're obviously talking to the wrong people to find out because it's been taking forever. The fact that the client never provides us with the proper documentation when we need it doesn't help. And we're only talking a small comany and a couple million dollars of stock.

[The Big Cat]

You're asking the question in a wrong way. A company's incorporation determines its tax status. Thus, Coca Cola corp is a US company, but say Coca Cola AG is a German company that is 100% owned by the US company. Under the int'l tax laws, income is taxed in jurisdiction it was earned. Pretty simple for small companies, but very complex for large multinationals. It's fair for Coca Cola USA to pay US taxes, and for Coca Cola AG to pay German taxes. But I think you can agree that it's a bit unfair for Coca Cola AG to pay both US and German taxes, just because one company owns the other. If you taxed both, then there would be much higher risk for Coca Cola USA to open up overseas offices and sell its product there. So it would never open up the German operation.

 

To eliminate that, countries have treaties where each subsidiary is taxed at the local jurisdiction. US, however, adds a kicker that if you want to bring in cash from your foreign sub to the US, it gets taxed. Yup, it gets taxed again whether or not it was taxed already at the host country. So companies don't bring the cash back and park it overseas for years.

 

This riles up the do-gooders in Congress who campaign against Benedict Arnold corporations for depriving the US Treasury. But they never change the law, because they know it's idiotic. If the law is changed, the the US companies will simply spin off the international operations, and the US will be a net loser. But populists would have own their battle.

 

That sort of makes sense to me. Not entirely, but sort of. I'm wondering if you were to substitue "Canary Islands" for "Germany" if it would continue to ring true?

 

The whole reason I asked in the first place was because sometime last Fall the New Yorker had a handful of their financial writers do op-ed pieces about what THEY would do to fix the economy, and one of the solutions was to eliminate tax shelters all together, thus generating a sh-t ton in tax revenue. But you're saying that's "idiotic." Is it "idiotic" for the same reasons for Germany AND say someone trying to hide their cash, i.e. Omar Little?

 

EDIT: Coca Cola

[finknottle]

Fortunately, the U.S. built up a surplus of jobs during the Bush years due to the tax cuts for the wealthy who graciously didn't move any jobs out of the U.S. and created a plethora of new jobs. I mean, that's how trickle down economics worked, right?

 

Your sarcasm is misplaced - put your Obama thinking cap on. The tax cuts for the wealthy saved millions of jobs that would otherwise have been lost had we plunged into a prolonged recession following the twin crisis of the bursting of the dot-com bubble and 9/11.

[Gene Frenkle]

That sort of makes sense to me. Not entirely, but sort of. I'm wondering if you were to substitue "Canary Islands" for "Germany" if it would continue to ring true?

 

The whole reason I asked in the first place was because sometime last Fall the New Yorker had a handful of their financial writers do op-ed pieces about what THEY would do to fix the economy, and one of the solutions was to eliminate tax shelters all together, thus generating a sh-t ton in tax revenue. But you're saying that's "idiotic." Is it "idiotic" for the same reasons for Germany AND say someone trying to hide their cash, i.e. Omar Little?

 

EDIT: Coca Cola

I think you actually mean Marlo Stanfield. I love that show...

 

Thought I'd join the crew in correcting you (without condensation this time).

[The Big Cat]

I think you actually mean Marlo Stanfield. I love that show...

 

Thought I'd join the crew in correcting you (without condensation this time).

 

Yeah, but one of my favorite moments was when Omar heard that Butchy was got. I think he was hiding out in Aruba, straw hat, Hawaiian shirt, khaki caprices and all!

[GG]

That sort of makes sense to me. Not entirely, but sort of. I'm wondering if you were to substitue "Canary Islands" for "Germany" if it would continue to ring true?

 

The whole reason I asked in the first place was because sometime last Fall the New Yorker had a handful of their financial writers do op-ed pieces about what THEY would do to fix the economy, and one of the solutions was to eliminate tax shelters all together, thus generating a sh-t ton in tax revenue. But you're saying that's "idiotic." Is it "idiotic" for the same reasons for Germany AND say someone trying to hide their cash, i.e. Omar Little?

 

EDIT: Coca Cola

 

First of all, I'm not talking about tax shelters but about tax jurisdictions. Money is like a gas, squeeze it at one end, it'll come out at another. If you want to raise tax revenue, you lower the cost of tax avoidance. The best way to do that is by lowering the marginal rate.