How corporations avoid paying income taxes

[Newsjock]

Source: San Francisco Chronicle

... In fact there is a corporate AMT, and it works very much like the individual AMT. ... (But) it does not apply to the profits that U.S. companies earn or purport to earn abroad. U.S. multinationals have found myriad ways to shift profits to foreign tax havens.

These companies do most of their business in the United States and other moderate-tax countries such as Germany, England and Spain. But they often put their intellectual property - such as trademarks or patents - into subsidiaries in low-tax countries such as Switzerland, Ireland, Bermuda or the Cayman Islands.

When one of the company's subsidiaries in a higher-tax country sells a product, it pays a royalty to the subsidiary in the tax haven. That shifts profits to the low-tax country, while the subsidiary in the high-tax country gets a tax deduction for the royalty payment.

... Now companies such as Cisco, Oracle and Google are lobbying for another repatriation holiday, saying it could bring back up to $1 trillion in foreign earnings. ... But the Center on Budget and Policy Priorities says "a second holiday would send a powerful message to corporations to shift investment and jobs overseas and hold the profits there - until yet another tax holiday is declared. Indeed, enactment of another such holiday would further embed the shifting of investment, jobs and profits overseas as a major tax avoidance strategy for many U.S. multinational corporations."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/21/BUVT1J4F2U.DTL&tsp=1

A good background explainer

[xchrom]

1. recommend

[orwell]

2. In the end tax policy has little to do with economic considerations...

...and far more to do with social engineering and kickbacks in the pay to play system of American politics.

[Hotler]

3. k&r n/t

[valerief]

4. The old fashioned way! They install their own pols and write their own laws. nt