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U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

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Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#71

Post by talideon »

wiredfool wrote: post #35
Someone1234 wrote: post #17

Earlier quoted context omitted.

They do. But it doesn't work even in the US's case. US companies will routinely "sell" their intellectual property to a subsidiary in e.g. Ireland and then license to back to the US company to avoid paying US taxes. There are some highly successful US companies who, per the books, make nearly $0/year profit within the US.

They should charge executives Irish income taxes if they pull that off. (While Ireland's corporate taxes are low, their personal taxes are ~59% over ~100k, and that _includes_ capital gains, and a lot of things that are tax advantaged in the states)

The loophole[1] regarding tax residency allowing a company to be effectively stateless was closed a while back. That was one of the things being exploited in this. The net effect, however, was that the companies in question just started using the Caymans and other similar jurisdictions.

[1] This explains the loophole that was closed: http://www.pearse-trust.ie/blog/bid/102942/Changes-To-Irish-...

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#72

Post by davidw »

rayiner wrote: post #55
sschueller wrote: post #13

Earlier quoted context omitted.

And the US double taxes their citizens living abroad the same way. As an American making the same money as your non-american co-worker you are left with a lot less just for having a US passport. It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes. Wanna get rid of your US passport? Not before you pay 10 years projected taxes and pay an abhorrent fee. You will also be listed…

> And the US double taxes their citizens living abroad the same way. The tax code has provisions to avoid "double taxes" on foreign income. You file Form 1116 to claim credit for taxes you paid to a foreign country as an offset against your U.S. tax liability.[1] That tax credit is separate from the income exclusion, which excludes the first ~$100k of foreign income from U.S. taxation. Generally, your total tax liabi…

It's perhaps not a big injustice as far as these things go, but it is not fair either.

I easily lost out on a thousand dollars of lost wages, accounting fees, and general hassle and stress doing my US taxes in Italy last year.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#73

Post by eropple »

lowpro wrote: post #28
colechristensen wrote: post #26

Earlier quoted context omitted.

The fist $100,000 income isn't taxed this way[1]. And it's not abhorrent. If you earned enough money to think it's advantageous to lose one of the most valuable passports in the world, you probably earned that money in large parts due to the support of the people and infrastructure of the United States. You don't get to drop your duties once you win big. [1] $97,600 for 2013, $99,200 for 2014 and $100,800 for 2015

American Imperialism at its finest. "Since we're the best country in the world, you couldn't have possibly become rich without us, and therefore you must pay to leave us!"

I have no real opinion on whether territorial versus worldwide taxation is correct, but I think this is incorrect. It's not "you couldn't have possibly," it's "you didn't." You're welcome to renounce your citizenship if you want to disprove the didn't part.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#74

Post by davidw »

wnevets wrote: post #37
colechristensen wrote: post #26

Earlier quoted context omitted.

The fist $100,000 income isn't taxed this way[1]. And it's not abhorrent. If you earned enough money to think it's advantageous to lose one of the most valuable passports in the world, you probably earned that money in large parts due to the support of the people and infrastructure of the United States. You don't get to drop your duties once you win big. [1] $97,600 for 2013, $99,200 for 2014 and $100,800 for 2015

its very typical for people to want their cake and eat it too. They want the benefits of having the US passport but don't want to pay for it.

There are benefits to being a Japanese, French, German, Norwegian, Australian or whatever citizen, yet none of them pay taxes at home if they reside in the US. They pay taxes where they live and work.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#76

Post by prostoalex »

cohomologo wrote: post #70
benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

Foreign taxes are effectively a business expense for corporations in the US, since the foreign tax credit allows them to not pay taxes on the taxes paid to foreign countries. I think this makes sense. If I live in the US and make some product and sell it in Germany, then whatever profit I bring home from Germany (less German taxes) is still an income that was effectively earned in the US, since I am living and workin…

It's very rare that a transnational corporation would have their labor concentrated in a single country.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#77

Post by prostoalex »

calbear81 wrote: post #51
tmaly wrote: post #44

Earlier quoted context omitted.

Also, the US has one of the highest corporate tax rates in the world. If you can go to Ireland and pay something close to 10%, its a no brainier. The tax rates are pretty crazy in the US if you think about it. A single person small business just getting started still has to pay 33% of their profit even if their profit is $1,000 for the entire year.

I'm not a tax expert but this statement is true if you only look at the statutory corporate tax rate before deductions and tax credits are taken into account. Once those are done and you used a weighted average based on country size, then the US is not that much higher ( http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth... ). I don't disagree that tax reform is necessary but taxes help pay for the infrastr…

> I don't disagree that tax reform is necessary but taxes help pay for the infrastructure, safety, and public goods that we all tap into and take advantage of.

People say that, but with specifics to corporate taxation the tax revenues in question flow to US Treasury. US highways are funded by a combination of Highway Trust Fund, gasoline taxes and road tolls, public safety and other goods such as parks and libraries are funded by local property and business taxes.

The way the funds flow is set up currently, increase or decrease in corporate taxation would not result in change of funding for the local services you mentioned. Federal government is not sending a bonus check to Cupertino, CA or Redmond, WA because they managed to squeeze a few extra billions off Apple or Microsoft.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#79

Post by coredog64 »

sremani wrote: post #23
zschallz wrote: post #19

Earlier quoted context omitted.

There's a large income exclusion that means unless you earn a really kick ass salary, you're unlikely to be double taxed.

tax is one part, but paperwork and penalties are the other scary part. I have only heard of it, how minute mistakes can end up with 50K fines etc. Probably some one who has gone through the filing taxes from overseas can give better insight.

US citizen who worked in New Caledonia for 2+ years. The scariest part is that I don't have any official documentation for what I earned. I had access to our payroll system that records the amount I earned in the local payroll system -- I didn't generally have a need to convert that to USD every pay period and record it. I was paid "in kind" for housing. And at the end of it all I got an unofficial letter stating what that amount was.
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