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"Then along came Ireland." This is utter nonsense. The problem is US tax repatriation laws introduced during the Clinton administration that allow US companies

"Then along came Ireland." This is utter nonsense. The problem is US tax repatriation laws introduced during the Clinton administration that allow US companies to leave their profits offshore in countries such as Bermuda or the Cayman Islands. Since they are only taxable on repatriation to the US, they pay no tax on them. Instead, they pressure Congress to introduce 'one-off' tax amnesties that allow them to repatriate at a much lower rate. This problem could be solved tomorrow if US politicians rescinded those tax laws. Ireland has no legal right to tax those profits, since they are earned by parent US company e.g. Google US. Which is perfectly correct, since the foundation of most of those profits are the intellectual property created primarily by the parent company. Don't let US politicians pull the wool over your eyes that this is a problem over which they have no control. In case you're interested, here's a good article that gives more background: http://www.rollingstone.com/politics/news/the-biggest-tax-scam-ever-20140827 http://www.rollingstone.com/politics/news/the-biggest-tax-sc...

AnthonyMouse 10y ago
And if they paid that tax in the US (which would then allow the US rate to be lower for the same revenue), how would that help Spain and France? The US would just be what Ireland currently is.
- uola 10y ago
  > (which would then allow the US rate to be lower for the same revenue) While I'm sure it can be minimized, the US doesn't have a particularly low corporate income tax rate. > And if they paid that tax in the US [...] how would that help Spain and France? Companies like Google not having to pay tax on revenues outside the US is essentially a government subsidy. One that creates a "slush fund" for US companies to acquire their European competition. We're essentially in a trade war, just that Europe hasn't realized it.
  - anonymousDan 10y ago
    Exactly! Basically US companies have a massive tax advantage over local competitors in other countries. Every time you see another local bookshop closing down because it can't compete with Amazon's 'economies of scale', you should realise in fact a large part of its advantages are due to US tax repatriation laws.
  - AnthonyMouse 10y ago
    > Companies like Google not having to pay tax on revenues outside the US is essentially a government subsidy. One that creates a "slush fund" for US companies to acquire their European competition. We're essentially in a trade war, just that Europe hasn't realized it. Except that "US companies" incorporated in Ireland aren't US companies. Can't European companies also incorporate in Ireland?
    - anonymousDan 10y ago
      Yes but the point is that if their main HQ is in another European country they can't avail of the repatriation laws unless that country has similar laws. Of course many EU countries have lower corporate tax levels than the headline US tax rate, but not all. I'm more concerned though about the race to the bottom in terms of corporate taxation than any EU/US competition. Interesting discussion, thanks.
    - uola 10y ago
      No, because Google isn't paying the Irish corporate tax but instead moving the money to a second Irish company (hence the double Irish) based in the Bahamas. A European company with a subsidiary based in the Bahamas would trigger anti-avoidance laws, which a US company won't (until they bring the money back into the US) because of a loophole in the US anti-avoidance laws.
      - AnthonyMouse 10y ago
        I think you misunderstand. The whole premise here is that none of the principals care where you're incorporated. A company whose primary employees are in Europe and whose primary customers are in Europe can still be incorporated in Delaware and traded on the NYSE. These tax avoidance mechanisms aren't for "US companies," they only work if you're in practice an international company. A "European company" which is also in practice an international company could do the same by becoming nominally a "US company" without changing anything of consequence about their operations. Because international companies don't really care where they're incorporated. The trade war isn't between US companies and European companies, it's between companies big enough to be "international" and everybody else.
late2part 10y ago
I didn't know this context. Thank you for taking the time to write this.

AnthonyMouse 10y ago

And if they paid that tax in the US (which would then allow the US rate to be lower for the same revenue), how would that help Spain and France? The US would just be what Ireland currently is.

uola 10y ago
> (which would then allow the US rate to be lower for the same revenue) While I'm sure it can be minimized, the US doesn't have a particularly low corporate income tax rate. > And if they paid that tax in the US [...] how would that help Spain and France? Companies like Google not having to pay tax on revenues outside the US is essentially a government subsidy. One that creates a "slush fund" for US companies to acquire their European competition. We're essentially in a trade war, just that Europe hasn't realized it.
- anonymousDan 10y ago
  Exactly! Basically US companies have a massive tax advantage over local competitors in other countries. Every time you see another local bookshop closing down because it can't compete with Amazon's 'economies of scale', you should realise in fact a large part of its advantages are due to US tax repatriation laws.
- AnthonyMouse 10y ago
  > Companies like Google not having to pay tax on revenues outside the US is essentially a government subsidy. One that creates a "slush fund" for US companies to acquire their European competition. We're essentially in a trade war, just that Europe hasn't realized it. Except that "US companies" incorporated in Ireland aren't US companies. Can't European companies also incorporate in Ireland?
  - anonymousDan 10y ago
    Yes but the point is that if their main HQ is in another European country they can't avail of the repatriation laws unless that country has similar laws. Of course many EU countries have lower corporate tax levels than the headline US tax rate, but not all. I'm more concerned though about the race to the bottom in terms of corporate taxation than any EU/US competition. Interesting discussion, thanks.
  - uola 10y ago
    No, because Google isn't paying the Irish corporate tax but instead moving the money to a second Irish company (hence the double Irish) based in the Bahamas. A European company with a subsidiary based in the Bahamas would trigger anti-avoidance laws, which a US company won't (until they bring the money back into the US) because of a loophole in the US anti-avoidance laws.
    - AnthonyMouse 10y ago
      I think you misunderstand. The whole premise here is that none of the principals care where you're incorporated. A company whose primary employees are in Europe and whose primary customers are in Europe can still be incorporated in Delaware and traded on the NYSE. These tax avoidance mechanisms aren't for "US companies," they only work if you're in practice an international company. A "European company" which is also in practice an international company could do the same by becoming nominally a "US company" without changing anything of consequence about their operations. Because international companies don't really care where they're incorporated. The trade war isn't between US companies and European companies, it's between companies big enough to be "international" and everybody else.

late2part 10y ago

I didn't know this context. Thank you for taking the time to write this.