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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

#91

Post by calbear81 »

prostoalex wrote: post #77
calbear81 wrote: post #51

Earlier quoted context omitted.

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…

My examples should have been more national such as the military, our National Parks and all of the national institutions that provide public goods that we share in like the FDA, NASA, etc. Even then though, don't local and state projects often tap into federal matching grants such as for major infrastructure projects?

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

#92

Post by Tobani »

danvoell wrote: post #89
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…

I thought the issue was that companies acquire say an Irish company and then instead of 35%, they are paying 10% and then instead of paying taxes in the US, they figure out how to move around goods and services to make it look like the profit was territorially gained in Ireland when in fact it was in the US. That is the issue. The greed is typically on the corporate side, more so than the government.

This was my understanding too. All parts of the world pay a "Licensing Fee" to the Irish company worth almost all of the profit on the good/service, and now all income is made in Ireland.

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

#93

Post by st3v3r »

sschueller wrote: post #13
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…

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."

Except they don't. You have an exemption for foreign income.

"It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes."

I don't believe this for a second. You would be a US Citizen, therefore you would have stepped foot in US territory.

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

#94

Post by sushid »

colechristensen wrote: post #82
ionised wrote: post #61

Earlier quoted context omitted.

Those things aren't exclusive to the US.

Yes, but if you earned your billion on the backs of US peoples and infrastructure, you have to pay a toll when you leave.

But what if you weren't even born in the US, much less have ever set foot in the US. Do you think it's fair to "pay a toll" when you're working in a foreign country?

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

#95

Post by st3v3r »

f3llowtraveler wrote: post #81
rayiner wrote: post #55

Earlier quoted context omitted.

> 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…

I think the big injustice is that people don't have a right to a jury in tax court. Therefore judgments are enforced without the consent of the people. Therefore taxation in the USA today is extortion. All the quibbling about the ridiculous bureaucratic rules and forms just makes it even more clear just what a leviathan our tax system has become.

"Therefore judgments are enforced without the consent of the people."

That's not true in the least.

"Therefore taxation in the USA today is extortion."

That's even less true.

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

#96

Post by cr1895 »

colechristensen wrote: post #83
cr1895 wrote: post #40

Earlier quoted context omitted.

>you probably earned that money in large parts due to the support of the people and infrastructure of the United States Or, you know, not. It's ridiculous to suggest that if you earn money abroad, American people and infrastructure are largely responsible for your success. It's in Dutch, but feel free to translate: http://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belastin...

I was talking about people renouncing their US citizenship to avoid American taxes. That article is talking about renouncing their US citizenship to avoid an administrative nightmare. The people mentioned in that article probably owed little to nothing, but just didn't realize or didn't handle the finer details of their dual-citizenship very well.

First I think it was unfair of me to assume that you meant income earned abroad when reading it again you didn't actually specify. I don't think that's what you were implying, that if you were financially successful in another country the American people are somehow responsible.

If you renounce your US citizenship you don't just get to erase all your existing tax obligations and if you're wealthy enough (i.e., the IRS assumes you're renouncing for tax purposes) you pay an exit tax. At what point is one's "duty" to the American public satisfied? Why are Americans so exceptional in this regard, where practically every other country in the developed world lacks taxation by citizenship?

https://travel.state.gov/content/travel/en/legal-considerati...

Just to put things in perspective:

Last year 4,279 people renounced their US citizenship. It's a big increase, up 20% from the year prior.

However, it's minuscule when you compare to the 8.7 million non-military Americans who live abroad. Less than 0.05%.

https://en.m.wikipedia.org/wiki/American_diaspora#Number_of_...

http://money.cnn.com/2016/02/08/news/americans-citizenship-r...

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

#97

Post by mtviewdave »

philiphodgen wrote: post #21

For those of you starting companies that may one day be worth a lot of money, there is a key insight to draw from this: it is better (from a tax point of view) to be a foreign company than a US company. This is especially true if you expect most of your future customers to be outside the US. In the long run this gives an operating advantage to foreign corporations -- again for tax efficiency only. In the intermediate…

For those of you starting companies now, probably the last thing you should be optimizing for is the amount of corporate tax your company will be paying after it becomes a unicorn.

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

#98

Post by cr1895 »

sushid wrote: post #94
colechristensen wrote: post #82

Earlier quoted context omitted.

Yes, but if you earned your billion on the backs of US peoples and infrastructure, you have to pay a toll when you leave.

But what if you weren't even born in the US, much less have ever set foot in the US. Do you think it's fair to "pay a toll" when you're working in a foreign country?

I don't think that's what he's saying. I think we are talking past each other, myself included.

a) cole seems to specifically be talking about very wealthy people who did work and earn money in the US but who renounced citizenship largely for tax purposes (e.g. Eduardo Saverin)

b) cole talks about the foreign-earned income exclusion, which is misplaced (for people like (a) this is very different from income earned on investments and for wealth which is subject to the exit tax)

There's a smattering of outright incorrect things too like having to pay taxes for 10 years after renouncing.

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

#100

Post by Larrikin »

kspaans wrote: post #18
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…

That's not double-taxation if the US has a tax treaty with the other nation (which is does with most nations). You get tax credits for foreign income taxes paid such that you pay max(foreign_tax, us_tax).

Only if you've been living there over a year. I made the mistake of moving abroad in January and had to pay all of the foreign taxes and all of the US taxes for basically an entire year.
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