Obama demands limits on U.S. company mergers

[+OverSword]

Rarely does the president propose something that I agree with, but this is one of those times. From the article:

President Barack Obama has demanded 'economic patriotism' from U.S. corporations that use legal means to avoid U.S. taxes through overseas mergers.

'I don't care if it's legal,' Obama declared on Thursday. 'It's wrong.'

Obama and congressional Democrats are pushing to severely limit such deals, a move resisted by Republicans who argue the entire corporate tax code needs an overhaul.

At issue are companies that enter into arrangements with foreign companies, shifting their tax addresses overseas while retaining their U.S. headquarters.

Read more here

Edited July 25, 2014 by OverSword

[questionmark]

That most probably is not the solution, the solution is that taxes should be paid there where the money is earned and that should be agreed world wide.

[Bama13]

I have absolutely no problem with anyone that uses all legal means to avoid paying more in taxes.

[questionmark]

I have absolutely no problem with anyone that uses all legal means to avoid paying more in taxes.

Which ends up in you paying more than you should because those who have a better accountant don't.

[Bama13]

Which ends up in you paying more than you should because those who have a better accountant don't.

I take every legal deduction I can so why shouldn't every one else. Wouldn't it be hypocritical to think otherwise?

[questionmark]

I take every legal deduction I can so why shouldn't every one else. Wouldn't it be hypocritical to think otherwise?

Well, if you want to keep paying more than your share go ahead, I'll rather have some corporate deadbeats (who freeload of the governments they don't pay any taxes to) pay some instead of me.

[+OverSword]

To me it's not about taxes. To me it's about these companies showing a bit of loyalty to the American system to which they owe their existence. They are not head quartered on the canary islands. The next step after this should be regulations and financial incentives for ensuring that they don't export jobs to other countries.

[Perceptivum]

Well, if you want to keep paying more than your share go ahead, I'll rather have some corporate deadbeats (who freeload of the governments they don't pay any taxes to) pay some instead of me.

You and Bama13 are talking about two different taxes here. Bama13 is discussing his personal income tax, while you and Obama are referring to corporate income tax. I, as well as many millions of Americans, use accountants, or software or our brains, to legally deduct as much from our own personal income tax as possible so as to pay as little, under the law, as possible. Corporations are taking their legal entity overseas as to limit the CORPORATE income tax imposed on the corporate entity. Limiting the tax burden on the corporation leads to increased earnings after tax and has a flow-down effect to shareholders. I have no issue with corporations doing this - this situation just brings to light the immediate necessity of overhauling the corporate tax code. A reduction in corporate income tax base would not adversely impact an individuals income tax burden, i.e., the U.S. government will not tax the individual more to make up for the corporate tax loss they will simply raise the corporate rate to offset.

[questionmark]

To me it's not about taxes. To me it's about these companies showing a bit of loyalty to the American system to which they owe their existence. They are not head quartered on the canary islands. The next step after this should be regulations and financial incentives for ensuring that they don't export jobs to other countries.

To me its about justice, if you demand equal protection you have to contribute equally. The money is secondary.

[questionmark]

You and Bama13 are talking about two different taxes here. Bama13 is discussing his personal income tax, while you and Obama are referring to corporate income tax. I, as well as many millions of Americans, use accountants, or software or our brains, to legally deduct as much from our own personal income tax as possible so as to pay as little, under the law, as possible. Corporations are taking their legal entity overseas as to limit the CORPORATE income tax imposed on the corporate entity. Limiting the tax burden on the corporation leads to increased earnings after tax and has a flow-down effect to shareholders. I have no issue with corporations doing this - this situation just brings to light the immediate necessity of overhauling the corporate tax code. A reduction in corporate income tax base would not adversely impact an individuals income tax burden, i.e., the U.S. government will not tax the individual more to make up for the corporate tax loss they will simply raise the corporate rate to offset.

Well, if corporations suddenly are persons (see Hobby Lobby) then they should also pay income taxes instead of corporate taxes.

[Wendigo Wangs]

This Obama guy....

Only a year or two ago this man reprimands the country that we must embrace globalism and the emerging one world economy.

Now he wants to be "patriotic"?

[Bama13]

Well, if you want to keep paying more than your share go ahead, I'll rather have some corporate deadbeats (who freeload of the governments they don't pay any taxes to) pay some instead of me.

If we really want to cut the amount we have to pay in taxes then we need to corral government spending. Do that and we can all pay less.

[Babe Ruth]

This Obama guy....

Only a year or two ago this man reprimands the country that we must embrace globalism and the emerging one world economy.

Now he wants to be "patriotic"?

Like so many other qualities, including beauty, patriotism is very much in the eye of the beholder, a subjective evaluation.

Some consider it patriotic to keep innocent men in Gitmo, for example, or patriotic to support crimes committed in Gaza, or patriotic to torture people in a "24" type scenario.

[aztek]

if they didn't make laws that made companies move overseas in a first place, they would not have to put any limits. or be in this mess at all.

[questionmark]

if they didn't make laws that made companies move overseas in a first place, they would not have to put any limits. or be in this mess at all.

Well, they (if you mean the US government) did not make the laws. Places like Turk and Caicos or Cayman Islands or Ireland made those laws. They have failed to make laws that say that if you earn money in the US you pay taxes in the US. (Strangely for those who have to pay income taxes and are US nationals there are laws requiring them to pay on all over $75,000 even when they live abroad and if there is no double taxation agreement even if they pay taxes abroad).

[aztek]

Well, they (if you mean the US government) did not make the laws. Places like Turk and Caicos or Cayman Islands or Ireland made those laws. They have failed to make laws that say that if you earn money in the US you pay taxes in the US. (Strangely for those who have to pay income taxes and are US nationals there are laws requiring them to pay on all over $75,000 even when they live abroad and if there is no double taxation agreement even if they pay taxes abroad).

i.m talking about laws that drove companies out of usa in a first place.

[questionmark]

i.m talking about laws that drove companies out of usa in a first place.

The companies did not move, Apple is still in Cupertino, Ca. Just its "tax home" seems to be in Ireland lately.

[bubblykiss]

Which ends up in you paying more than you should because those who have a better accountant don't.

I know, it is like people are unable to do this math. If the very rich and poor and corporations don't pay taxes who does that leave to pay?

Well...................

[questionmark]

I know, it is like people are unable to do this math. If the very rich and poor and corporations don't pay taxes who does that leave to pay?

Well...................

You are the winner!

[danielost]

If you want them to bring their money back to the USA then lower their taxes... companies pay where the taxes are less.

[aztek]

The companies did not move, Apple is still in Cupertino, Ca. Just its "tax home" seems to be in Ireland lately.

company pays taxes where their HQ is regestered at. so apple must have regestered their hq in ireland, even thou still have presense in Ca.

[danielost]

I know, it is like people are unable to do this math. If the very rich and poor and corporations don't pay taxes who does that leave to pay?

Well...................

The rich and corporations are the same. It is the poor and middle class that pay taxes via prices on products and services. This is one reason the rich get richer and the poor get poorer.

[questionmark]

company pays taxes where their HQ is regestered at. so apple must have regestered their hq in ireland, even thou still have presense in Ca.

Well, evidently not, because Apple says they are headquartered in Cupertino... go figure.

[aztek]

Apple set up some Irish subsidiaries a mere four years after it was founded. Foreign sales, which account for 60% of Apple’s profits, are routed through these Irish subsidiaries and taxed nowhere. How is this possible, when the intellectual property that supports the value of Apple’s products is in the United States?

Apple has an Irish holding company with no operations or employees at the top of its foreign operations. This company also serves as a group finance company. Apple Inc., the U.S. parent of the whole group, pays U.S. tax on the investment earnings of this company. Otherwise, the holding company pays no tax to any government, and has not paid tax for five years. It claims tax residence nowhere.

Beneath the holding company is an Irish principal company that holds the contracts with Apple’s Chinese contract manufacturers and owns the inventory they produce. It also claims tax residence nowhere, despite having paid some tax to Ireland in recent years, but at rate far below the statutory rate. It and another Apple operating affiliate share the foreign rights to Apple’s U.S. based technology.

Ireland. Ireland is a tax haven. The European definition of a tax haven is a country that cuts deals with foreign companies that don’t do any business there.

If Ireland were a legitimate low-tax country, all of Apple’s Irish affiliates would be paying the statutory 12.5% rate on their income. Instead, those Apple affiliates that do pay Irish tax appear to be paying a lower rate due to a special income calculation.

Moreover, the Irish holding company and the Irish principal company have not paid any tax to any government for the past few years. Ireland allows some Irish companies to claim non-residence if they are related to a company that is doing business there. That enables Apple’s Irish principal company—through which most of its sales income flows—to pay tax nowhere

http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-avoid-taxes/

[questionmark]

Apple set up some Irish subsidiaries a mere four years after it was founded. Foreign sales, which account for 60% of Apple’s profits, are routed through these Irish subsidiaries and taxed nowhere. How is this possible, when the intellectual property that supports the value of Apple’s products is in the United States?

Apple has an Irish holding company with no operations or employees at the top of its foreign operations. This company also serves as a group finance company. Apple Inc., the U.S. parent of the whole group, pays U.S. tax on the investment earnings of this company. Otherwise, the holding company pays no tax to any government, and has not paid tax for five years. It claims tax residence nowhere.

Beneath the holding company is an Irish principal company that holds the contracts with Apple’s Chinese contract manufacturers and owns the inventory they produce. It also claims tax residence nowhere, despite having paid some tax to Ireland in recent years, but at rate far below the statutory rate. It and another Apple operating affiliate share the foreign rights to Apple’s U.S. based technology.

Ireland. Ireland is a tax haven. The European definition of a tax haven is a country that cuts deals with foreign companies that don’t do any business there.

If Ireland were a legitimate low-tax country, all of Apple’s Irish affiliates would be paying the statutory 12.5% rate on their income. Instead, those Apple affiliates that do pay Irish tax appear to be paying a lower rate due to a special income calculation.

Moreover, the Irish holding company and the Irish principal company have not paid any tax to any government for the past few years. Ireland allows some Irish companies to claim non-residence if they are related to a company that is doing business there. That enables Apple’s Irish principal company—through which most of its sales income flows—to pay tax nowhere

http://www.forbes.co...le-avoid-taxes/

correct, you make some kind of an ltd company that holds your trade mark (or whatever) and send them all your earnings as "license fees". The ltd does not have to pay any taxes (or very little) and bingo: You paid taxes nowhere. And you can keep the corporate headquarters in the country of origin where you "don't earn any money" but freeload on the infrastructure paid by everybody else..

Edited July 25, 2014 by questionmark