A one trillion dollar Christmas ask
Bloomberg is reporting that US business executives visited the White House mid-December to ask for a tax break (yes, another tax break) to encourage them to repatriate over one trillion of offshore earnings sitting in tax havens.
In normal circumstances these earnings would be subjected to a 35 percent tax rate when they are repatriated to the US, but as Jesse Drucker explains in the article, companies devise all sorts of strategies, including the Killer B and the Deadly D to avoid paying the tax.
The lawyers are using schemes so complex that, as one lawyer put it,
"One diagram resembled a schematic from the Manhattan Project."
It is a game of cat and mouse: countries put up defences against offshore abuse, and the lawyers set to work defeating the will of elected legislatures.
“Some of the best minds in the country are spent all day, every day, wheedling nickels and dimes out of the tax system,” said H. David Rosenbloom, an attorney at Caplin & Drysdale in Washington, D.C., and director of the international tax program at New York University’s school of law.
Joe Slemrod, economics professor at the University of Michigan’s school of business and former senior tax economist for President Reagan’s Council of Economic Advisers, says the business lobbyists' arguments that repatriating over a trillion dollars of offshore cash would promote investment "holds no water at all": U.S. companies are already sitting on a record pile of cash -- $1.9 trillion in liquid assets, according to Federal Reserve data. They ain't investing - and so how will letting them bring that money back make a difference? It will just mean higher executive bonuses and more private jets - and fewer public services
Read the full article here. It's an important one.
In normal circumstances these earnings would be subjected to a 35 percent tax rate when they are repatriated to the US, but as Jesse Drucker explains in the article, companies devise all sorts of strategies, including the Killer B and the Deadly D to avoid paying the tax.
The lawyers are using schemes so complex that, as one lawyer put it,
"One diagram resembled a schematic from the Manhattan Project."
It is a game of cat and mouse: countries put up defences against offshore abuse, and the lawyers set to work defeating the will of elected legislatures.
“Some of the best minds in the country are spent all day, every day, wheedling nickels and dimes out of the tax system,” said H. David Rosenbloom, an attorney at Caplin & Drysdale in Washington, D.C., and director of the international tax program at New York University’s school of law.
Joe Slemrod, economics professor at the University of Michigan’s school of business and former senior tax economist for President Reagan’s Council of Economic Advisers, says the business lobbyists' arguments that repatriating over a trillion dollars of offshore cash would promote investment "holds no water at all": U.S. companies are already sitting on a record pile of cash -- $1.9 trillion in liquid assets, according to Federal Reserve data. They ain't investing - and so how will letting them bring that money back make a difference? It will just mean higher executive bonuses and more private jets - and fewer public services
Read the full article here. It's an important one.
posted by TJN at 3:04 am
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