Quote: (08-04-2014 10:31 AM)Bad Hussar Wrote:
A basic tenant of taxation is that income should be taxed at source. If the income of these companies is genuinely from foreign operations then the USA should have no claim on them. The loophole that really needs to be closed is the one that allows companies to claim particular income was generated in a certain low-tax jurisdiction, and be right from a tax-law point of view, when even a 9 year old would be able to conclude that the origin of the income is in another higher tax jurisdiction. Google and Starbucks have been in the news recently for pulling this trick in Europe, but all the multinationals do the same.
I mean if you were a CEO and you had to decide where to have your legal headquarters why would you decide to have it in a country that taxed income not earned in that country? And at a high rate at that. Unless you were in the defense industry ("Deep State"), or reliant on government contracts otherwise, you'd be crazy to.
The solution for governments is to go back to basics by taxing income at source, and making sure source is correctly determined. And by correctly I mean by a process of common sense, not a legalistic sense designed from the outset to obfuscate. The states predicament is their own doing because they have allowed lobbyists to carve out exceptions and special treatments that are now used by far more companies than originally paid the bribes...I mean political donations.
I don't think that would ever happen while the US is on top. I agree, though, and it would make the US a competitor when it comes to businesses.
The US seems to think it has no competition. It can just legislate and make companies pay them. Obama wants to stop companies from merging and relocating overseas.
The more the US tries to bully corporations the more they will end up losing in the long run.
We are in a global economy and location isn't as important as it once was. Countries are competing for businesses to startup or relocate. The US has been way behind which is typical.
I remember reading an article talking about startups in the US and overseas. It's basically came down to ease at this point and the US is going to kill that with more legislation. Sooner or later, it will be easier and more beneficial for people to startup overseas.