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I'd like to see corporation tax replaced with a Border Adjustment Tax [1]. The tax would be paid on the result of USA Revenue - USA Costs. If you were to move

I'd like to see corporation tax replaced with a Border Adjustment Tax [1]. The tax would be paid on the result of USA Revenue - USA Costs. If you were to move intellectual property offshore and licence it from that subsidiary then that would not be a USA Cost and therefore would not be deductible. If you brought it back onshore then it would only be deductible if there was a cost. If you moved into another company within the US, then it would be a cost but that company would then need to pay tax on that revenue minus the minimal costs that it would incur to store IP. 1. http://www.investopedia.com/terms/b/border-adjustment-tax.asp http://www.investopedia.com/terms/b/border-adjustment-tax.as...

hdhzy 9y ago
Okay sounds good in this case but what if a company really needs to buy a licence from an offshore company, let's say a critical technical part in your manufacturing process. Then you can't deduct it but in reality these are your costs. Remember that the problem is caused by companies abusing the system but the rules are there because honest companies need to operate. The real solution would fix the issue while allowing honest companies to work just like they did before. The problem is that software companies are composed almost purely out of intellectual property, that is intangible and hard to really track.
- aembleton 9y ago
  Then they would need to raise your prices to afford the tax, or select a more expensive locally made alternative.
- AnthonyMouse 9y ago
  > Then you can't deduct it but in reality these are your costs. The tax wasn't collected to begin with. The reason you can deduct it when buying from a local company is that they paid it. If you buy from a foreign company that hasn't paid it then you have to because they didn't. It isn't an unfairness, it's the reinstitution of fairness.
m12k 9y ago
Hadn't heard of that before. Personally, I'm rooting for https://en.wikipedia.org/wiki/Formulary_apportionment https://en.wikipedia.org/wiki/Formulary_apportionment
- AnthonyMouse 9y ago
  Anything like that which results in a huge financial incentive for outsourcing is not going to be popular.

hdhzy 9y ago

Okay sounds good in this case but what if a company really needs to buy a licence from an offshore company, let's say a critical technical part in your manufacturing process. Then you can't deduct it but in reality these are your costs. Remember that the problem is caused by companies abusing the system but the rules are there because honest companies need to operate. The real solution would fix the issue while allowing honest companies to work just like they did before. The problem is that software companies are composed almost purely out of intellectual property, that is intangible and hard to really track.

aembleton 9y ago
Then they would need to raise your prices to afford the tax, or select a more expensive locally made alternative.
AnthonyMouse 9y ago
> Then you can't deduct it but in reality these are your costs. The tax wasn't collected to begin with. The reason you can deduct it when buying from a local company is that they paid it. If you buy from a foreign company that hasn't paid it then you have to because they didn't. It isn't an unfairness, it's the reinstitution of fairness.

m12k 9y ago

Hadn't heard of that before. Personally, I'm rooting for https://en.wikipedia.org/wiki/Formulary_apportionment https://en.wikipedia.org/wiki/Formulary_apportionment

AnthonyMouse 9y ago
Anything like that which results in a huge financial incentive for outsourcing is not going to be popular.