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> It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud.... Isn

> It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud.... Isn't this exactly what all megacorps are hoping for everyone thinks? I am not saying that you are wrong but these megacorps are some of the most evil the Civilization has ever seen (see Meta) and now you and I are hired as tax attorneys - pretty soon (if not right away) one of us will go "this shit's very much so illegal but who is actually going to audit us? - the answer, per your comment is basically no one because we think these megacorps and their lawyers are there to play by the book...

AnthonyMouse 8mo ago
In order for that to make sense to them, it would have to be impossible for them to avoid paying taxes without breaking the law, but the very nature of applying "corporate income tax" to an international supply chain makes that relatively straightforward. The general problem is this. You have a company with its headquarters in Ireland that designs a product in California, manufactures it in China and sells it in Germany. In which country did they make a profit and therefore owe taxes? It depends on what each subsidiary bought from the others and how much they paid, so they're going to structure their operations so that the profit ends up in the one with the lowest taxes. That's the defect in "corporate income tax" for international companies, and why it gives international companies an advantage over domestic ones. In order to fix that you need a tax code that says the taxes have to be paid to the country where whatever subset of their operations you want to tax is actually present. But then it's not "corporate income tax" anymore. If you want to tax them in the location they have workers it's payroll tax, if it's where they have buildings it's property tax, if it's where they have customers it's VAT, etc. You need it to be something they can't so easily move out of your jurisdiction. Because if you say that it's profit then they'll just arrange to make their profits in Ireland or Bermuda.
- oarsinsync 8mo ago
  Or the US could tax it's corporations just like it taxes it's citizens. Doesn't care that the citizens pay tax in whatever country they live in. If they earn over some 6 figure sum, they have to pay tax in the US as well. That would put US corporations at a distinct disadvantage on the global scene, so it won't happen. Disadvantaging citizens doesn't seem to matter as much.
  - AnthonyMouse 8mo ago
    The thing the US does to its citizens is bizarre and atypical and it should stop doing that. But how would that even work for a corporation? Suppose you did that; is anything multinational going to remain a US corporation? Of course not, they'll just register in some other country. The CEO of Stellantis nee Chrysler is in Michigan but how many people can guess which country the corporation is registered in without looking it up?
  - solidsnack9000 8mo ago
    The problem here is not how the US taxes corporations, but rather that there are different corporations involved. A regular citizen can not establish an additional, foreign citizen that "owns" them or "supplies" them with IP (or labor hours, &c) -- this kind of tax management accounting is not possible for citizens.
    - oarsinsync 8mo ago
      They're not different unrelated corporations, they're subsidiaries of a parent that is ultimately a US entity. The citizen has literally upped and moved themselves entirely to a foreign country. The corporation has just forked a bit of itself elsewhere. And yet the corporation can't be taxed, but the individual can.
      - AnthonyMouse 8mo ago
        You still haven't answered the question: What are you going to do when Apple or Google becomes "subsidiaries of a parent that is ultimately not a US entity"? What about your proposal prevents them from registering the parent company somewhere else while changing nothing else about their operations? Making them file different paperwork doesn't accomplish anything.
        bdangubic 8mo ago
        would in this case help to treat Apple and Google as foreign company? No government contracts (or super strict rules to get them), tariffs…?

AnthonyMouse 8mo ago

In order for that to make sense to them, it would have to be impossible for them to avoid paying taxes without breaking the law, but the very nature of applying "corporate income tax" to an international supply chain makes that relatively straightforward. The general problem is this. You have a company with its headquarters in Ireland that designs a product in California, manufactures it in China and sells it in Germany. In which country did they make a profit and therefore owe taxes? It depends on what each subsidiary bought from the others and how much they paid, so they're going to structure their operations so that the profit ends up in the one with the lowest taxes. That's the defect in "corporate income tax" for international companies, and why it gives international companies an advantage over domestic ones. In order to fix that you need a tax code that says the taxes have to be paid to the country where whatever subset of their operations you want to tax is actually present. But then it's not "corporate income tax" anymore. If you want to tax them in the location they have workers it's payroll tax, if it's where they have buildings it's property tax, if it's where they have customers it's VAT, etc. You need it to be something they can't so easily move out of your jurisdiction. Because if you say that it's profit then they'll just arrange to make their profits in Ireland or Bermuda.

oarsinsync 8mo ago
Or the US could tax it's corporations just like it taxes it's citizens. Doesn't care that the citizens pay tax in whatever country they live in. If they earn over some 6 figure sum, they have to pay tax in the US as well. That would put US corporations at a distinct disadvantage on the global scene, so it won't happen. Disadvantaging citizens doesn't seem to matter as much.
- AnthonyMouse 8mo ago
  The thing the US does to its citizens is bizarre and atypical and it should stop doing that. But how would that even work for a corporation? Suppose you did that; is anything multinational going to remain a US corporation? Of course not, they'll just register in some other country. The CEO of Stellantis nee Chrysler is in Michigan but how many people can guess which country the corporation is registered in without looking it up?
- solidsnack9000 8mo ago
  The problem here is not how the US taxes corporations, but rather that there are different corporations involved. A regular citizen can not establish an additional, foreign citizen that "owns" them or "supplies" them with IP (or labor hours, &c) -- this kind of tax management accounting is not possible for citizens.
  - oarsinsync 8mo ago
    They're not different unrelated corporations, they're subsidiaries of a parent that is ultimately a US entity. The citizen has literally upped and moved themselves entirely to a foreign country. The corporation has just forked a bit of itself elsewhere. And yet the corporation can't be taxed, but the individual can.
    - AnthonyMouse 8mo ago
      You still haven't answered the question: What are you going to do when Apple or Google becomes "subsidiaries of a parent that is ultimately not a US entity"? What about your proposal prevents them from registering the parent company somewhere else while changing nothing else about their operations? Making them file different paperwork doesn't accomplish anything.
      - bdangubic 8mo ago
        would in this case help to treat Apple and Google as foreign company? No government contracts (or super strict rules to get them), tariffs…?