4 ms·

It does seem like e.g. the US could impose this unilaterally. You, a company, have to make two tax returns: one on all the money you made here, and one on all t

It does seem like e.g. the US could impose this unilaterally. You, a company, have to make two tax returns: one on all the money you made here, and one on all the money you and/or your relevant "parent" corporation made elsewhere. Same rules to calculate taxes in both cases. On the latter return, you can subtract the sum of the taxes you paid elsewhere from the tax owed. The rest belongs to the US government. At that point there'd be no point in a country offering cut-rate taxes to any corporation that does substantial business in the US, because taxes on any profit realized internationally will still be collected. It's just that the US is taking them rather than the country that's offering the cut-rate tax deal. So that country (Ireland or whoever) no longer benefits from having low corporate taxes, and they might as well have taxes at least as high as those in the US. It seems like any sufficiently important country or union could impose a rule like this if they wanted to. There must be some facet of international law that prevents it, or some other complexity to the idea that I'm missing.

realityking 5y ago
I’m neither a lawyer nor an accountant but I’d expect it to run counter to all existing double taxation agreements. All those agreement would have to be cancelled or renegotiated - that’s a lot of work.
- eecc 5y ago
  Why? The parent suggested to discount the tax paid abroad from the taxes to be paid in the US. It is the double-taxation prevention agreement. Me being a cynical bastard will expect countries rallying to offer themselves to the US and reduce their cut to buy political favor.
  - realityking 5y ago
    Double taxation agreements describe rules to assign the taxation of an activity to a jurisdiction. The other jurisdiction can then no longer tax that activity. With your proposal you do end up taxing it twice, just at a reduced rate. As I understand it, that would require changes to double taxation agreements.
asteroidbelt 5y ago
Yes, this is exactly what the US does with US citizens: they pay the maximum of the US income taxes and the residence country income taxes.
- heavyset_go 5y ago
  > they pay the maximum of the US income taxes and the residence country income taxes. The IRS collects on income over $108k/year, and income over that amount is taxed at that bracket and higher. Foreign Tax Credit also prevents double dipping by the IRS.

realityking 5y ago

I’m neither a lawyer nor an accountant but I’d expect it to run counter to all existing double taxation agreements. All those agreement would have to be cancelled or renegotiated - that’s a lot of work.

eecc 5y ago
Why? The parent suggested to discount the tax paid abroad from the taxes to be paid in the US. It is the double-taxation prevention agreement. Me being a cynical bastard will expect countries rallying to offer themselves to the US and reduce their cut to buy political favor.
- realityking 5y ago
  Double taxation agreements describe rules to assign the taxation of an activity to a jurisdiction. The other jurisdiction can then no longer tax that activity. With your proposal you do end up taxing it twice, just at a reduced rate. As I understand it, that would require changes to double taxation agreements.

asteroidbelt 5y ago

Yes, this is exactly what the US does with US citizens: they pay the maximum of the US income taxes and the residence country income taxes.

heavyset_go 5y ago
> they pay the maximum of the US income taxes and the residence country income taxes. The IRS collects on income over $108k/year, and income over that amount is taxed at that bracket and higher. Foreign Tax Credit also prevents double dipping by the IRS.