Tag: corporate taxes

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folly free trade & free markets general freedom moral hazard too much government

When Parasites Collide

Apple, EU, tax, Europe, Ireland, illustr

There are times I wish I were a tax accountant.

You know, just so I could better understand the news.

The European Commission has handed Apple, Inc., a $14.5 billion tax bill.

Owed to Ireland.

Apple, the tax commissioners said, had paid too little in taxes to Ireland, amounting to a mere 1 percent of the company’s European profits.

The Emerald Isle’s normal corporate tax rate is 12.5 percent.

On first read, this sounded like a tale of crony capitalism, with the EU’s tax authorities riding in, heroically, holding aloft the gonfalon of fair play, on the side of truth, justice, and an even playing field.

Well, the story gets complicated. The U.S. Treasury has protested the ruling as unfair. And Senator Chuck Schumer called it a “cheap money grab.”

The Wall Street Journal opinion page comes out on Apple’s side, too, but gives some specifics. Apple paid all the taxes it owed under Irish and EU law, but the ruling wasn’t about law, it was, we are told, about politics.

I can believe that.

So, as near as I can make out, what we have here are three sets of governmental interests, each intent on sucking the most out of a rich, innovative, and wildly successful multinational corporation.

It’s hard not to side with the target, Apple, and think of the other groups as mere parasites.

After all, my non-accountant’s spidey sense suspects that Schumer objects because the U.S. government isn’t going to get any of that $13 billion.

Preferring an “expensive money grab,” I suppose.

This is Common Sense. I’m Paul Jacob.  

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Apple, EU, tax, Europe, Ireland, illustr

 

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free trade & free markets general freedom Ninth Amendment rights tax policy

Taxation Rules

Overburdened Pack Mule

It turns out the United States is a tax haven.

Haven? Heavens! I live here. I don’t feel that low-​tax feeling when April 15 rolls around.

But the Cato Institute’s Dan Mitchell, an expert on all things tax-​policy — a dirty job, but somebody’s gotta do it — says “The U.S. Is a Tax Haven … and That’s a Very Good Thing.”

He is a huge fan of international tax competition. He likes it when governments at least marginally decrease the tax burden on prospective producers and investors, so as to lure production and investment from other tax jurisdictions. In his opinion, “we need some way to restrain the greed of the political class.”

Fans of big government disagree. Tax competition hinders their master plans to control and plunder the rest of us.

Mitchell knows that we mere U.S. citizens tend to lug a big tax load. But the United States is in fact “a tax haven. Not for Americans, of course, but … we have some good rules for foreigners.” In addition to their ability to exploit the especially robust corporate privacy rules of a state like Delaware, foreign investors can avoid taxes on interest and capital gains on their stateside investments.

Now, Mitchell says, let’s apply those “same good policies to Americans.”

Hear hear! Havens I can access are even more appealing than those I can’t.

This is Common Sense. I’m Paul Jacob.

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Overburdened Pack Mule

 

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national politics & policies tax policy

Tax Reductions Ahead?

As the president yammers on about making the rich “pay their fair share,” behind the scenes his administration has suggested reducing corporate tax rates by seven points. Meanwhile, Obama’s main challenger, Mitt Romney, promised a full ten point rate cut, if elected.

Why? By international standards, American corporate taxes are obviously way too high.

The U.S. effective tax rate on new corporate investment sits at 35.6 percent today, which, write Duanjie Chen and Jack Mintz for the Cato Institute, “is almost twice the average rate for the 90 countries” the duo studied, in “Corporate Tax Competitiveness Rankings for 2012.”

The U.S. has higher corporate tax rates than France.

And India, Colombia, Brazil, Japan, Venezuela, Korea, Russia, Costa Rica, you name it. This is not something we want to be No. 1 at.

Well, at least Argentina, Chad and Uzbekistan tax at even higher rates.

There’s no consolation in others’ folly, though.

The authors look northward, to Canada, which, since 2000, made some huge adjustments downward on tax rates affecting businesses: 15 percent cuts in federal statutory tax rates, eliminating most capital taxes, removing sales taxes on capital goods, and scaling back on special preferences that tend to make taxation such a mess there as well as here. And all the while revenues from these taxes have remained stable per GDP.

Could we get lower corporate taxes, here? Well, this is not an area where those on the left can enviously eye their beloved European social democracies to make their usual, tedious case for higher taxes. Norway’s rates are ten percent lower than ours, and Sweden’s, Denmark’s and Finland’s are lower yet.

This is Common Sense. I’m Paul Jacob.