The tax code for U.S. corporations contains some
peculiarities that the general public hardly knows about. Henkel[1] added that if
profits are made by these companies but earned abroad, and the money, as cash,
is not returned to the United States ,
it cannot be taxed in the U.S.
system. This is an invitation for internationally active companies to use this
legal loophole and stash their profits abroad; thereby reducing tax revenue in
the United States .
Regulations do not come more peculiar than this incentive to
move production to Europe or the Far East . In
fact, regional offices of U.S.
corporations are mushrooming overseas – in Ireland ,
Great Britain , The
Netherlands, Luxembourg , Switzerland , and Singapore . The arguments of the
defenders of this policy are oddly alienating; they promote business outside
the United States , which is
detrimental to the U.S.
economy and, therefore, the American people. Allan Sloane, a reporter for Fortune magazine, wrote in 2014 how U.S. corporations buy companies in Europe and
move their headquarters there to avoid paying U.S. taxes. These moves are called
“inversions.”[2]
In my view, U.S. tax laws favor large U.S. corporations
in contrast to small or medium-sized companies and individual citizens. Companies
with branches around the globe are taxed for their U.S. profit only. But, U.S. citizens
living abroad are taxed around the globe for their income. Why the difference?
Is it based on powerful and influential lobbying in Washington that only corporations can
afford?
According to Jilani,[3]
thirty U.S.
corporations from 2008 to 2010 spent more on lobbying than what they paid in income
taxes.
[1] Christiane H. Henkel, “US Konzerne horten Geld” [US
Corporations Hoard Cash], Neue Zürcher
Zeitung, October 11, 2011.
[3] Zaid Jilani, “Between 2008 And 2010, 30 Big Corporations Spent More Lobbying Washington
Than They Paid In Income Taxes,“ Think Progress Economy, December 7, 2011, (with full
list of these companies).
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