3 ms·

Extremely high taxes don't work because it forces companies to move operations over seas.

• tomp 10y ago
  That's a political decision. You could simply enact laws that prevent or dis-incentivise that. But unfortunately, most politicians aren't paid to do that...
  • deelowe 10y ago
    Yeah. Simply make it difficult to do business in the US. That'll work!
• candiodari 10y ago
  What I don't get about the US is that when a US employee works overseas, the government taxes them -under US rules- anyway. Even if they don't work in the US at all. The same arrangement, as I understand it, goes for people who work part of the year in the US. You work 1 day in the US under a US work visa, you pay US taxes. On everything. Why not do the same for companies ? If you want to do business in the US, you pay US taxes. Not on what you sell in the US, but everything, all your earnings worldwide. You get to deduct local taxes as a cost, but other than that, there is no accomodation. If the rule is good enough for people, it is good enough for business. And if your criticism is that businesses will go overseas, that's the exact same argument for people. People drop their US citizenship just to avoid US taxes for crying out loud.
  • seanmcdirmid 10y ago
    If you are a non-resident you don't get taxed on worldwide income. If you are a foreign company with US income you don't get taxed in worldwide income. And why should SAP pay less taxes than IBM...could IBM compete with SAP if they weren't held to the same standards? You do have to report worldwide income to figure out your rate. Also, many countries have different tax systems, so does a fee count as tax paid or as a deduction to operating income? If a country organizes its burden purely as fees, then are you getting screwed on income? For countries with tax rates less than the US, an expat can still get screwed by higher fees and cost of living to go with that. So much so that the usa introduced an overseas housing deduction just for people who work in Singapore, Hong Kong, Switzerland. Complicated, because most tax systems are not very comparable.
    • coredog64 10y ago
      Not entirely true (expat from 2011 to 2013, please seek qualified tax professional advice). The US grants an exemption of something like $60K/year for income earned entirely outside the US. It has to be paid by a non US entity in local currency. And, IIRC, there were a few other requirements. They will also credit you with any income tax you may have paid in your country of residence. You are correct that you're pretty well screwed in a high cost-of-living country as the base exemption won't go far. But then, you're pretty well screwed by the IRS sticking its nose into the bank accounts of US citizens looking for transactions of $10,001.
      • seanmcdirmid 10y ago
        The foreign earned income tax exclusion is much more than $60k, it is almost $100k now. I don't take it because the tax credit is much easier to work with once you make more than that. But that applies to high tax countries where the tax credit will negate USA taxes completely.
  • slavik81 10y ago
    Businesses can split in two a lot more easily than people.
  • deelowe 10y ago
    Because then the businesses would just stop doing business in the US. The govt will do anything it can to keep them there. The current situation is actually optimal for the current corporate oligarchy.