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My point was that each $1 borrowed could be treated as repatriating $1 of foreign profits. Companies already report foreign profits and the IRS can discriminate
by cletus 9y ago
My point was that each $1 borrowed could be treated as repatriating $1 of foreign profits. Companies already report foreign profits and the IRS can discriminate between foreign and domestic profits.
So this wouldn't be taxing borrowing. If you had no foreign profits then you pay no taxes. The point here is that companies borrow are near-zero interest rates because it's MUCH cheaper than repatriating profits and paying 35% tax on them. I can't blame them for that either.
What I'm saying is that borrowing in lieu of repatriating profits basically is repatriating profits and should be taxed as such.
- darawk 9y agoYa, but I guess what i'm wondering is how you distinguish between a company who has 'legitimate' foreign profits and a US subsidiary that's taking out a legitimate loan vs. taking out a loan to avoid repatriating profits.
- cletus 9y agoWhy should there be a difference?
- darawk 9y agoWell, if you don't distinguish...then you're just taxing a company who has a foreign subsidiary and takes out a loan. Which seems sort of arbitrary, no? You wouldn't want to tax that across the board for the same reason that you don't tax loans generally.
- valuearb 9y agoWhy should any multinational base itself in the US under your proposal. Apple could shift HQ to Ireland or China or France or even Germany and net tens of billions a year more. Apple doesn’t need to manufacture in the US. It doesn’t need to base most marketing/sales/finance in the US. It could leave just software and design in CA, and honestly report far lower US profits, and it wouldn’t owe the US another dime on foreign profits. In fact, given 2/3s of their profits are international, they should do this now. Why pay the US an additional $10B a year in taxes on computers and phones made in China and shipped everywhere but the US?
- valuearb 9y agoRepatriation is the only thing preventing us from losing every large multinational corporation. Other countries corporate income tax systems are so much more attractive to companies and investors already. Just stop taxing corporate income, it’s a corrosive tax that makes us poorer by driving off investment.