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> If the US had a globally competitive corporate tax rate (say 15%), it would make most of these tactics irrelevant. Until Ireland further lowers its taxes. Yo

> If the US had a globally competitive corporate tax rate (say 15%), it would make most of these tactics irrelevant. Until Ireland further lowers its taxes. Your argument leads to a race to the bottom. The problem with only taxing dividends is that corporations only pay out a small portion of their profits in dividends. I may theoretically be a billionaire in my holdings, but I only need a million in dividends per year to live my preferred lifestyle. Thus I only pay tax on the million dollars instead of on my billions. You can try and get at the money via capital gains, but what if the bulk of the money is being held by a foreign company, with only a small amounts to pay dividends to the owners filtering into the main company?

acslater00 14y ago
That's great. If apple makes $1b, if the bulk of the money is held by a foreign SUBSIDIARY, my stock will go up, and I will pay capital gains. If they give it to me as a dividend, I will pay taxes on that. If they reinvest it in the company and the investment makes money, my stock will go up even more. And if they reinvest it in the company and squander it all, no taxes will be collected on the income, but they won't be able to write the loss off anything either. The only thing that truly captures the vagaries of 'where money is held' is the stock price. Wall Street don't care if that money is in New York or Guatemala, if Apple has it it's making the stock go up.
- jarek 14y ago
  Wall Street does care about there the money is. That is why tech companies have spent huge sums lobbying for a repatriation amnesty.
  - yummyfajitas 14y ago
    Tech companies want repatriation amnesty so they can invest the money in the US. I have no idea why we want to prevent them from doing this.
    - FireBeyond 14y ago
      So they can invest -some- of the money in the US. And pay salaries, bonuses and dividends with the rest - without paying the appropriate corporate income tax rate first. That's why.
      - yummyfajitas 14y ago
        The profits were earned in Ireland. Why is the "appropriate" corporate income tax owed to the US greater than zero? Should Guinness also pay the US taxes for profits earned in Ireland?
- byrneseyeview 14y ago
  The value of your stock is the net present value of the future dividends you should expect. If you put a billion dollars in cash on a rocket and launch it into space, the value of that billion dollars is not one billion. It's near zero, depending on the odds and cost of recovering the currency.
yummyfajitas 14y ago
Ireland can't lower it's taxes to the point of unprofitability, so it will lower it's taxes until revenues raised == cost of services + small margin. That's a good thing. Don't complain that others provide the same service at lower cost, try to innovate and outcompete them.
- BCM43 14y ago
  But that won't work if some very small country lowers it's tax to 1%. The US can't compete with that.
  - ajkessler 14y ago
    Why not? (Honest question.) We have states that have no personal income tax. Not surprisingly, these states are doing fine because they raise revenue other ways.
    - JamesLeonis 14y ago
      Income tax only accounts for some of the taxes a state can take in. Property and sales tax are also forms states use to collect income, and they happen to be regressive in most cases. If you look at the CFED chart [2], those nine states [1] with no income tax make up the top 9 slots where the bottom 20% pay many times more in taxes than the top 1% (as a percentage of income), from 3.8 times (Tennessee) to a whopping 6.7 times (Washington). [1] http://www.irs.gov/efile/article/0,,id=130684,00.html http://www.irs.gov/efile/article/0,,id=130684,00.html [2] http://scorecard.assetsandopportunity.org/2012/measure/tax-burden-by-income http://scorecard.assetsandopportunity.org/2012/measure/tax-b...
      - pgisadickyup 14y ago
        http://bastiat.org/en/the_law.html http://bastiat.org/en/the_law.html
      - Drbble 14y ago
        Note that welfare benefits can cancel out a lot of taxes and restore the progressive effect.
rmc 14y ago
Until Ireland further lowers its taxes. Unlikely. Ireland is currently in an IMF/ECB bailout programme, and will be for a few more years. Financial policy decisions cannot be made by the Irish government, and must be approved by the IMF/ECB. Recent budget changes (e.g. a change to VAT rate) were discussed in the German parliament before the Irish parliament.

acslater00 14y ago

That's great. If apple makes $1b, if the bulk of the money is held by a foreign SUBSIDIARY, my stock will go up, and I will pay capital gains. If they give it to me as a dividend, I will pay taxes on that. If they reinvest it in the company and the investment makes money, my stock will go up even more. And if they reinvest it in the company and squander it all, no taxes will be collected on the income, but they won't be able to write the loss off anything either. The only thing that truly captures the vagaries of 'where money is held' is the stock price. Wall Street don't care if that money is in New York or Guatemala, if Apple has it it's making the stock go up.

jarek 14y ago
Wall Street does care about there the money is. That is why tech companies have spent huge sums lobbying for a repatriation amnesty.
- yummyfajitas 14y ago
  Tech companies want repatriation amnesty so they can invest the money in the US. I have no idea why we want to prevent them from doing this.
  - FireBeyond 14y ago
    So they can invest -some- of the money in the US. And pay salaries, bonuses and dividends with the rest - without paying the appropriate corporate income tax rate first. That's why.
    - yummyfajitas 14y ago
      The profits were earned in Ireland. Why is the "appropriate" corporate income tax owed to the US greater than zero? Should Guinness also pay the US taxes for profits earned in Ireland?
byrneseyeview 14y ago
The value of your stock is the net present value of the future dividends you should expect. If you put a billion dollars in cash on a rocket and launch it into space, the value of that billion dollars is not one billion. It's near zero, depending on the odds and cost of recovering the currency.

yummyfajitas 14y ago

Ireland can't lower it's taxes to the point of unprofitability, so it will lower it's taxes until revenues raised == cost of services + small margin. That's a good thing. Don't complain that others provide the same service at lower cost, try to innovate and outcompete them.

BCM43 14y ago
But that won't work if some very small country lowers it's tax to 1%. The US can't compete with that.
- ajkessler 14y ago
  Why not? (Honest question.) We have states that have no personal income tax. Not surprisingly, these states are doing fine because they raise revenue other ways.
  - JamesLeonis 14y ago
    Income tax only accounts for some of the taxes a state can take in. Property and sales tax are also forms states use to collect income, and they happen to be regressive in most cases. If you look at the CFED chart [2], those nine states [1] with no income tax make up the top 9 slots where the bottom 20% pay many times more in taxes than the top 1% (as a percentage of income), from 3.8 times (Tennessee) to a whopping 6.7 times (Washington). [1] http://www.irs.gov/efile/article/0,,id=130684,00.html http://www.irs.gov/efile/article/0,,id=130684,00.html [2] http://scorecard.assetsandopportunity.org/2012/measure/tax-burden-by-income http://scorecard.assetsandopportunity.org/2012/measure/tax-b...
    - pgisadickyup 14y ago
      http://bastiat.org/en/the_law.html http://bastiat.org/en/the_law.html
    - Drbble 14y ago
      Note that welfare benefits can cancel out a lot of taxes and restore the progressive effect.

rmc 14y ago

Until Ireland further lowers its taxes. Unlikely. Ireland is currently in an IMF/ECB bailout programme, and will be for a few more years. Financial policy decisions cannot be made by the Irish government, and must be approved by the IMF/ECB. Recent budget changes (e.g. a change to VAT rate) were discussed in the German parliament before the Irish parliament.