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Of course, the cost of duty is ultimately offloaded to the same citizens you're supposed to be protecting. Not to mention, the elephant in the room here is tha
by vezzy-fnord 11y ago
Of course, the cost of duty is ultimately offloaded to the same citizens you're supposed to be protecting.
Not to mention, the elephant in the room here is that no evasion is being performed, but avoidance. To equivocate the two would create a moral hazard that would also affect the same citizens you're supposed to be protecting.
- toomuchtodo 11y agoFunny enough, a stroke of the legislative pen changes these activities from avoidance to evasion, no moral hazard required.
- vezzy-fnord 11y agoHow? Corporate mergers appear to be an intrinsically available strategy for avoiding an extraterritorial corporate tax system. What intervention will your legislative pen impose?
- toomuchtodo 11y ago> Corporate mergers appear to be an intrinsically available strategy for avoiding an extraterritorial corporate tax system. ...because of legislation and existing tax code allowing it. > What intervention will your legislative pen impose? I would have to speak with a legal associate with experience drafting legislation for specific language. The purposes would be to ensure any tax intended to specifically be avoided by a merger would be re-captured (this isn't out of the ordinary; the AMT in the US is specifically designed to disallow certain income tax deductions when a taxpayers income reaches a certain level, to prevent tax avoidance). My understanding is that the Double Irish Arrangement "loophole" has been closed, but further work needs to be done.
- vezzy-fnord 11y agoSo, the business purpose and economic substance doctrines. Again, flimsy normative statements. A legislative pen obsessed with maximizing such a function will eventually write things unsavory to civil liberties, as well.
- charlesdm 11y agoSo your solution is to make every merger with a foreign entity illegal?
- toomuchtodo 11y agoOnly if done primarily to avoid/evade taxes.
- charlesdm 11y agoI'm not up to date on the details of US tax law, but I'd be surprised if such a general anti avoidance rule does not exist. Mergers the size of this will always have genuine economic incentives in place to do the deal. Add to that very well paid lawyers who will put together an amazing story to get the deal through. So it won't stop them. Also, this won't stop companies from being sold outright to a foreign competitor. If a Chinese company swoops in and buys the US company, these laws can not apply. It seems like an easy problem to fix, but it's extremely complex.