U.S. Companies Are Stashing $2.1 Trillion Overseas To Avoid Taxes

jevans64 said:
Some US companies are already starting to do this. Forgot what the financial terminology is but it is where a large US corporation buys up a smaller foreign company and then moves the HQ there to avoid paying ANY US taxes. Perfectly legal these days but Congress has been trying to pass legislation making it illegal.
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You're talking corporate inversion. Slightly different than the shell game. Both are pretty devious and should be outlawed.
 
Jeremy C said:
You're talking corporate inversion. Slightly different than the shell game. Both are pretty devious and should be outlawed.
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I have an idea. Here's the scenario:

Apple (for the sake of example) is based in the US and everyone knows it.

However, Apple stores a big stash of earning overseas in some country Y like OP article indicates.

What if it was possible for country X to encapsulate Apple's money-storing vehicles in a "virtualized" container that applies only the US's tax code within that container. Apple must agree to operate its financial vehicles within that container, or face eviction from the country.

In other words, if Apple is hiding cash over in Switzerland - Switzerland forces Apple to operate its money-hiding vehicles in a vacuum were it's just those vehicles and the US tax code...just as if those vehicles were operating on US soil subject to the US tax code.

Crazy idea??
 
Damnit. Country Y and country X are the same - just one country, one variable.

WTB edit button in news posts
 
GlowingGhoul said:
So to improve our competitiveness as a nation, we should TAX THE SH!T out of those evil corporations who employ tens of millions of people so the government can re-distribute their profits to those who REALLY DESERVE IT, right?

You have clearly never started or run a business. I'd say it's a pretty likely you're part of the half of the population who pay nothing in federal taxes.

As for Exxon paying a "negative tax rate", well, that's just the cherry on top of your ignorance cake. Go ahead, reassert it with some trite explanation of how they pay a negative tax rate so I can humiliate you some more.
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Corporations/companies are not job creators. That's a misnomer created in the last few election cycles. A businesses sole purpose is to turn a profit. It does this by employing as few people as possible. The real job creators are the consumers, without them, businesses would either cease to exist or employ no-one.

However, with the widening gap and shrinking middle class, there's less consumers in the marketplace to create jobs.
 
This should be a criminal offense, considered a betrayal to the nation. These assets need to be seized, but then government is so thoroughly corrupted that they to betray the nation and suck up to the corporate wallets like the traitors they are. Corporate values, eclipsing human values to a large extent, will not prove beneficial to the vast majority of humans, but then those few who will benefit don't care. I love all the hot tech, but the future is looking really ugly, and not romantic ugly like Gibson's Neuromancer, but more like McCarthy's The Road.
 
dgingeri said:
This is money made overseas that would see a substantial tax rate if moved here, far more than the standard tax rate. They paid their taxes to the countries where their overseas operations were based, and would see basically triple taxation to move it here. For every dollar in profit they made overseas, they'd actually see around ten cents if they moved it here. They could keep it overseas and reinvest it to expand overseas operations. It makes sense for them NOT to move it here. The US government is forcing their hand with this overtaxation, and it is costing us all jobs and raises.
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Yup. Bingo. They would essentially have to pay taxes twice at an outstanding rate. I'm not one for corporations being given freedom over the citizen like some of the other posts describe here but it's not that cut and dry in this case. If that money is legitimately made out of the country it's made implausible to bring it back to the states due to paying taxes on both sides. Then again you can argue that a lot of the money should have been made in the states and sent overseas, in some cases
 
Just to clarify I meant to type "and NOT sent overseas" in that last line. No edit in this subforum!
 
They're not avoiding paying the taxes, they're prolonging paying the taxes. They're going to want to bring the money back here eventually. They're betting on the fact that the tax-cutting Republican congress will lower the rate they have to pay in the meantime.
 
As others have noted I think the use of the term "avoid" taxes is deceptive ... they will pay the taxes when they repatriate the funds ... if China or another developing nation had half a brain they would offer them a repatriation deal to bring a big chunk of the funds to their country for expansion (so their country gets the windfall) ... the money serves little purpose while it is expatriated (except to make the balance sheet look good with all those cash reserves) ... however, to actually use the money (to buy companies or expand) they have to repatriate it somewhere (and that would be when they end up paying taxes) ... personally I think that Congress should just bite the bullet and give them a 2-3% repatriation tax rate (that would probably be low enough for them to come back but better than the 0% they get now)
 
atp1916 said:
I have an idea. Here's the scenario:

Apple (for the sake of example) is based in the US and everyone knows it.

However, Apple stores a big stash of earning overseas in some country Y like OP article indicates.

What if it was possible for country X to encapsulate Apple's money-storing vehicles in a "virtualized" container that applies only the US's tax code within that container. Apple must agree to operate its financial vehicles within that container, or face eviction from the country.

In other words, if Apple is hiding cash over in Switzerland - Switzerland forces Apple to operate its money-hiding vehicles in a vacuum were it's just those vehicles and the US tax code...just as if those vehicles were operating on US soil subject to the US tax code.

Crazy idea??
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Bonkers because why would that country give up its ability to tax apple made profits there?

If I had a business that made a substantial amount of money overseas I wouldn't bring the money back either. Why would I want to get triple taxed basically, since corporations are already subject to double taxation in the US. I might as well use that money to buy companies that exist overseas, transfer it to a shell company somewhere else and pay that company a fee for licensing the tech or resources.

I dont mind paying taxes but I sure as hell wont pay more taxes than I have to.
 
Apples pays Foxconn a fortune to make their products in China and they pay taxes there. If they bring the profits home they get taxed yet again.
Would you like to pay your taxes twice especially when the US rate is around 42%?
 
kbrickley said:
As others have noted I think the use of the term "avoid" taxes is deceptive ... they will pay the taxes when they repatriate the funds ... if China or another developing nation had half a brain they would offer them a repatriation deal to bring a big chunk of the funds to their country for expansion (so their country gets the windfall) ... the money serves little purpose while it is expatriated (except to make the balance sheet look good with all those cash reserves) ... however, to actually use the money (to buy companies or expand) they have to repatriate it somewhere (and that would be when they end up paying taxes) ... personally I think that Congress should just bite the bullet and give them a 2-3% repatriation tax rate (that would probably be low enough for them to come back but better than the 0% they get now)
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As an individual I am able to save money in a tax advantaged account, which basically goes to the stock market. Even if I take money out early, I get to use compounding to my advantage here, so I do all I am legally allowed here.

I think they could do the same on a larger level. Such an easy way to get more of that money invested here, at home. Since that is what the government is "spending" money on anyway, it seems obvious.
 
You could lower the effective tax rate to compete with really cheap countries however the vast majorjority of taxes ccome from small business whom do not have offshore accounts. So you moght be giving up a couple trillion overall just to try to get the big fish back.

The solution is to force companies to track which percentage of their profits come from which countries and if a piece of software (lets say word) is sold from microsoft shell company in bumtruck egypt then an import duty gets assigned close to the matching tax rate. But that would fly in the face of things like NAFTA.
 
ep0x73 said:
Apples pays Foxconn a fortune to make their products in China and they pay taxes there. If they bring the profits home they get taxed yet again.
Would you like to pay your taxes twice especially when the US rate is around 42%?
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I'll start with that this topic can not be further from my area of expertise or caring. I'd like to think that someone made it this way to give incentive to not send our manufacturing overseas... now if we're inhibiting exports, that's bad.
 
Btw for those who say there used to be a 90 percent tax on the rich under eisenhower and that the rich bebefit more today...you would be wrong. There was a number of loopholes one could use in the past to avoid paying taxes. If you look at the effective tax rate over time...amount earned versus amount paid oit after tax breaks and loopholes you would discover that the top 5 percent actually pay about the same.
 
How about we go back to the spending levels we had when Eisenhower was president? I'm all for that.
 
Smashing Young Man said:
How about we go back to the spending levels we had when Eisenhower was president? I'm all for that.
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Perhaps you didnt read my previous post how effective tax rates really didnt change over the years as loopholes were closed. Ie...that 50 foot yacht you bought doesnt count as a business expense to entertain potential clients.
 
Mohonri said:
Or, you know, we could reduce our corporate tax rate from the highest in the developed world, so companies have less incentive to keep it overseas...but that would entail "being nice to corporations", and we can't have that, no siree
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You mean people react negatively when you're overly greedy with their money.

Their ultimate solution is to pick up and go outside the country completely. What can we do then, send drones?
 
DigitalGriffin said:
Btw for those who say there used to be a 90 percent tax on the rich under eisenhower and that the rich bebefit more today...you would be wrong. There was a number of loopholes one could use in the past to avoid paying taxes. If you look at the effective tax rate over time...amount earned versus amount paid oit after tax breaks and loopholes you would discover that the top 5 percent actually pay about the same.
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Yes there was a lot of avoidance strategies including investing your money outside the country. When things were made more normal in the 80's a bunch of money came home which helped lift up the lagging economy.
 
This country is all about change and adaptation. Instead of the left constantly arguing that real corporation taxes are very low and double taxation is not a factor, how about we actually experiment a little and do away the double taxation laws. What's the worst that could happen? it might actually work to bring money back? and if not at least you have factual evidence that it doesn't instead of ideological theory crap.
 
It's a product of a tax code that can't be understood by any living soul on earth.

Seriously, the American tax code will become Skynet one day.
 
I believe it is already self-aware, it just needs an Austrian strongman.
 
dgingeri said:
This is money made overseas that would see a substantial tax rate if moved here, far more than the standard tax rate. They paid their taxes to the countries where their overseas operations were based, and would see basically triple taxation to move it here. For every dollar in profit they made overseas, they'd actually see around ten cents if they moved it here. They could keep it overseas and reinvest it to expand overseas operations. It makes sense for them NOT to move it here. The US government is forcing their hand with this overtaxation, and it is costing us all jobs and raises.
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WOW. Never have I seen someone so misinformed about a topic. The total tax on those overseas profits is around 30%. The companies are also allowed to deduct the amount of tax they already paid the country the profit was generated in. What's causing over taxation in the USA is willfully ignorant people giving companies a free pass on shady behavior. All those taxes they are dodging are being paid in the end by regular folks because they have to be made up somehow.
 
The problem will only be fixed by either 1) eliminating taxes all together or 2) companies change their philosophy on supporting their own workforce.

The truth is no matter how low the tax rate is, with enough revenue, that tax rate will be seen as a major loss of funds and cause this type of behavior.
 
its not really a story in till it is all lost like all of them bitcoins
 
Idiots who think taxes on corporation only affect the shareholders are........idiots. Corporate taxes are stupid and should be zero because any tax on them is passed on to the consumer.
 
DarkStryke said:
I would laugh but the same nutter ideals that have contributed to ruining your middle class have moved north and ruined ours too.
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I would say that globalization has ruined the middle class way more than any tax ideas. Companies didn't go with Chinese manufacturing companies because of tax benefits, it was all because of labor costs. This took nearly every decent paying, low education job out of the country. And then to finish up the anal raping, they turn around and market the ever living shit out of their products to make the middle class feel like they NEED to have these stuff.
 
PHubb said:
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and "innovative" accounting that enables it to concentrate its profits offshore.
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It's also how the US tax system works for businesses. Because if a business makes 5billion in profit, one quarter, then buys another company for 5 billion the next, that's a net zero gain, which it is taxed on, even though the value of the company increased. Now compare this to the individual, You make $5k a month, and $1.5k goes to rent, $500 to car payment, $500 on food, $200 on utilities, $200 on entertainment, guess how much you are taxed on? The full $5k. Now sure some of that can be a write off, the standard deduction is laughable in that regard because the federal guideline for how much you should be able to say "this is living expense" is the same everywhere so if you live in NYC or in BF, Idaho it's the same allowance.

Obviously taxing a company based upon it's income, and not the profit would be absolutely crazy and would put many low margin businesses out of business. However there should be some middle ground, akin to the standard deduction, ok you can count buying supplies for goods, employee salaries, cost of utilities as part of a "business expense" however acquiring new stuff should not be. Microsoft paying $2.5billion for Minecraft may have been just as much about taxes as it was about acquiring the IP to it. Because that removes $2.5 billion in profit that MS needs to report as taxes.
 
I really think that the USA should seriously consider switching completely to property tax. I know people think that is radical but think about it. The first most important consideration of any tax is that it be enforceable. Property tax is the only tax which is nearly 100% enforceable. If you don't pay you lose your property. And since we in American already spend the money and time in most states to survey and assess nearly all property why not just stack all the taxes into that one category.

Reason 2, property tax is pretty much unavoidable, if you do anything in America somehow you must interact with property. Doesn't matter if you live in hotels even, doesn't matter if you rent, or own, sooner or later someone be it you or your landlord has to pony up for property tax. And if it is your landlord they have to pass the cost on to you.

Reason 3, property tax will be more stable. Most taxes that rely on income or profit are volitale and change quickly with the economy.

There are many taxes that people find loop holes around, for instance the entire online retail industry runs circles around sales taxes. But property taxes are the one thing that benefit you directly right where you live and work that is where it counts right? As globalization and cheap travel continue we will just see more and more people finding ways around taxes. Now days the government seems to think the solution is to keep trying to add more code to current taxes and exapand them and even possibly violate the constitution but why when a perfectly simple and legitimate tax is right in front of our noses. Imagine how much simpler and slimmer our government could be if they didn't have to run around trying to enforce income tax something that can easily be avoided by simply using cash? This would free up both corporations and citizens to have a much simpler tax code and much simpler life allowing them to focus more time and energy on making their business and work run better instead of being drowned in a plethora of taxes and regulations.
 
Gman1979 said:
WOW. Never have I seen someone so misinformed about a topic. The total tax on those overseas profits is around 30%. The companies are also allowed to deduct the amount of tax they already paid the country the profit was generated in. What's causing over taxation in the USA is willfully ignorant people giving companies a free pass on shady behavior. All those taxes they are dodging are being paid in the end by regular folks because they have to be made up somehow.
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Corporate taxes have never been a huge money maker and its not an excuse for government not living within its means regardless.

As for taxing companies, guess the fuck what. They basically pass that cost off to consumers who react negatively to price increases by buying less creating unemployment. Sounds like such a win. The effect is far more dramatic if the company has foreign competition and instead of taxing the piss out of their products those exports are likely exempt from tax if not downright overtly or covertly subsidized. So it doesn't take much tax load to make those guys non-competitive and go under. So you end up with no taxes and no jobs.
 
rudy said:
Reason 3, property tax will be more stable. Most taxes that rely on income or profit are volitale and change quickly with the economy.
.
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Yeah except for places where there's a huge boom, and a house that one year cost $150k, now costs 850k 5 years later well out pacing the rise of wages. And then what happens when you get cities like Detroit? Property taxes plummet because no one wants to live there.

Of course you also have places like California, where there are laws to protect you from the above increases, which is great for me, poor for the state, since the value of my house is taxed it is only about $50k... in San Francisco. In fact the majority of my property taxes are at the city level from special parcel taxes that passed because everyone renting here doesn't realize those increase their rent directly.

I'm not big on property taxes, it seems like the whole lord of the land taxing his peons bit. I realize those taxes go toward services (as is always rammed down our throat) but why can't cities and state governments simply budget for those services? Half of the appeal of owning your own house is that you can say "this is mine forever!" after scrimping and saving to the point where you actually own said house 100% outright... you still are forced to work to pay off the property taxes, rent to the state. Imagine what would happen if this occurred at the federal level... holy shitstorm batman.
 
tazeat said:
Why do people say loopholes when the code specifically allows this by design? There are already a ton of laws to tax what they can, because I'm sure if they could have found a way to tax it the the govt would have.

Kind of like a "gunshow loophole" when private sales are and have been specifically legal forever. Just shows ignorance to the actual law and the intent behind it.
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In part because: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”.

It is also a convenient boogeyman to take on a walk for certain pet issues to rile up a respective base. The letter of the law is all that matters and everyone knows this. Loophole can be translated to "stop obeying the letter and start obeying the spirit".
 
sfsuphysics said:
Yeah except for places where there's a huge boom, and a house that one year cost $150k, now costs 850k 5 years later well out pacing the rise of wages. And then what happens when you get cities like Detroit? Property taxes plummet because no one wants to live there.

Of course you also have places like California, where there are laws to protect you from the above increases, which is great for me, poor for the state, since the value of my house is taxed it is only about $50k... in San Francisco. In fact the majority of my property taxes are at the city level from special parcel taxes that passed because everyone renting here doesn't realize those increase their rent directly.

I'm not big on property taxes, it seems like the whole lord of the land taxing his peons bit. I realize those taxes go toward services (as is always rammed down our throat) but why can't cities and state governments simply budget for those services? Half of the appeal of owning your own house is that you can say "this is mine forever!" after scrimping and saving to the point where you actually own said house 100% outright... you still are forced to work to pay off the property taxes, rent to the state. Imagine what would happen if this occurred at the federal level... holy shitstorm batman.
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There is pretty much no case where a persons home value goes from 150K to zero, but that happens all the time when people are fired or laid off nationwide. I never said property taxes where perfect but the reality is they are more stable than many other forms of taxes. For instance its kind of funny that in MI groceries are exempt from sales tax. But the funny thing is groceries are about the only thing you cannot survive without buying so one of the most stable forms of tax revenue is exempt, meanwhile we cry all day about how people are not paying taxes when they buy stuff from amazon. But then we recognize most groceries are still bought locally and cannot bring ourselves to tax them.

Now the federal government is trying to screw over businesses by making them collect taxes for states, all different states all different laws, all different systems for paying all different tax rates. It is literally accounting hell for small businesses the big businesses don't care because they hire that many accountants anyway. My point is why don't they just say that's your problem states and let the states sort it out. If they did that sooner or later states would realize they have to get to a tax they can actually enforce, property tax is one they can, and they already have most of the records for who owns what.

I understand your concern but the reality is that you must pay taxes one way or another personally I would be much happier in life if my taxes were from one angle instead of pounding me in every hole in my body. As a person who pays taxes and files as I should, quite frankly it pisses me off that I have so many taxes to file from so many different places. All of the current tax subsidies and credits could also be applied to property tax. you own a kid you get a property tax credit. If you work and can show a W2 maybe you get earned income property tax credit lol, your first residence has a lower tax rate, places of business, zoning, etc..... it can all be worked into a single system.

I personally don't care about places where there is a huge boom, if you own a home where a huge boom happens and you cannot afford to keep it good for you. Your example is kind of ridiculous, your home value shoots up to 850k um sell it and you are half way to retirement and move somewhere cheaper. It amazes me there are actually people out there whom complain when the price of their home goes up. lol WTF kind of jacked up society do we live in when someone complains about adding 600K in equity to their life?
 
"U.S. Companies Are Stashing $2.1 Trillion Overseas To Avoid Taxes"

good..................
 
rudy said:
There is pretty much no case where a persons home value goes from 150K to zero, but that happens all the time when people are fired or laid off nationwide.
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And as you said, "you don't pay your taxes, they take your house" what happens when someone doesn't pay their taxes? How much revenue is that unlived in house going to be making?
 
sfsuphysics said:
And as you said, "you don't pay your taxes, they take your house" what happens when someone doesn't pay their taxes? How much revenue is that unlived in house going to be making?
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Someone else buys the house cheaper and starts paying taxes. And the person whom vacated the house moves somewhere else and starts paying rent.
 
tazeat said:
Why do people say loopholes when the code specifically allows this by design? There are already a ton of laws to tax what they can, because I'm sure if they could have found a way to tax it the the govt would have.

Kind of like a "gunshow loophole" when private sales are and have been specifically legal forever. Just shows ignorance to the actual law and the intent behind it.
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It's a loophole because it was not the intended behavior. If you are a multi national, the intent was to allow you to keep money earned outside the country outside the country without tax penalty. What we have are companies doing things like cooking the books so that money earned here supports "operations" in tax advantaged locations 100% while holidng money there as if it were profit of that operation regardless of which market generated the revenue. Then to avoid pissing off share holders, they borrow against that stash to pay dividends here and declare the whole thing as additional operating expense.

The code allows it, but it wasn't the intended behavior. I hate the term loophole in this instance as well as I tend to regard this kind of thing as a bug. However, tomato, tomato.
 
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