When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Sunday, June 2, 2013

The Irish Sandwich and US Tax Policy

I've argued for a long time that we need comprehensive tax reform. Now Washington, after 30 years or so, apparently has woke up, and has held hearings to reform the corporate tax system.  It doesn't take a rocket scientist to figure this out, but if you have been busy with other things, here's a start--

The Corrosive Effect of Apple’s Tax Avoidance - NYTimes.com: "The news in the Senate report about Apple was not that the company had found ways to shift income to low-tax jurisdictions. Lots of multinational companies do that. The news was that Apple had found a way to move a large part of its income to subsidiaries that claimed to not exist anywhere, at least when it came to paying taxes."

Hearings | Homeland Security & Governmental Affairs Committee: "Offshore Profit Shifting and the U.S. Tax Code - Part 1 (Microsoft & Hewlett-Packard)"

Hearings | Homeland Security & Governmental Affairs Committee: "Offshore Profit Shifting and the U.S. Tax Code - Part 2 (Apple Inc.)"

Apple Shows It's Time . . . . - Bloomberg: "Tim Cook, the chief executive of Apple Inc., came to the U.S. Senate on May 21 to advocate an overhaul of the nation's corporate tax code. Tax profits at 20 percent, Cook said, and offer no loopholes, no deductions, no complexities."

Don't Tax Apple, Tax Its Shareholders - Bloomberg: "Apple Inc. Chief Executive Officer Tim Cook appeared before the Senate Permanent Subcommittee on Investigations this week to defend his company's tax record. The media has focused on how much of Apple's income is earned by subsidiaries that do not claim tax residence anywhere and therefore do not pay tax. That's a problem -- but not the big problem.
The big problem is that the process of determining the taxable U.S. income of a multinational corporation is necessarily complicated and arbitrary."

Explaining Apple’s Irish Tax Dodge - Bloomberg: "It’s easy to be jaded, though. The IRS is in constant turmoil, most recently over singling out Tea Party groups for extra scrutiny. It’s doubtful that Congress will respond. Congress is the main reason the tax code is a mess. At least the public is better informed about how corporate taxes work. We should take progress where we can get it."

By the way, I do not favor eliminating the corporate tax. I favor Tim Cook's proposal (see above)--otherwise multinational corporations will continue to bank huge surpluses and use same to consume whole industries and destroy competition--through government regulation (yes, governments--including the US--are "bought"), litigation (patents, copyrights, etc.), and other predatory practices.


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects