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riverbendviewgal

(4,253 posts)
Sun Aug 31, 2014, 09:56 AM Aug 2014

Do you understand what inversion is, as with the Tim Horton and Burger King marriage?

I didn't but I do understand clearly now.
http://www.bloombergview.com/articles/2014-08-26/burger-king-and-the-whopper-about-taxes

This clarifies what the hullaboo is about, I bet most Americans and Canadians don't know this. I didn't .

The purpose of an inversion has never been, and never could be, and never will be, "ooh, Canada has a 15 percent tax rate, and the U.S. has a 35 percent tax rate, so we can save 20 points of taxes on all our income by moving." Instead the main purpose is always: "If we're incorporated in the U.S., we'll pay 35 percent taxes on our income in the U.S. and Canada and Mexico and Ireland and Bermuda and the Cayman Islands, but if we're incorporated in Canada, we'll pay 35 percent on our income in the U.S. but 15 percent in Canada and 30 percent in Mexico and 12.5 percent in Ireland and zero percent in Bermuda and zero percent in the Cayman Islands."
What is he talking about? The U.S., unlike most developed-world governments, insists on taxing the global income of its citizens and corporations that have U.S. headquarters. And because the U.S. has some of the highest tax rates in the world, especially on corporate income, this amounts to demanding that everyone who got their start here owes us taxes, forever, on anything they earn abroad.

This is a great deal for the U.S. government, which gets to collect income tax even though it’s not providing the companies sewers or roads or courts or no-knock raids on their abodes. On the other hand, it’s not a very good deal for said citizens and corporations, especially because our government has made increasingly obnoxious demands on foreign institutions to help them collect that tax. Both private citizens and corporations who have a lot of income abroad are deciding that they’d rather renounce their ties to the U.S. than deal with the expense and hassle of letting it tap into income that they have earned using some other country’s roads and sewers and police protection.
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Do you understand what inversion is, as with the Tim Horton and Burger King marriage? (Original Post) riverbendviewgal Aug 2014 OP
"U.S. government... not providing the companies sewers or roads or courts or no-knock raids... " Gidney N Cloyd Aug 2014 #1
not quite true. for corporations, foreign income is taxed only if it is brought back into the u.s. unblock Aug 2014 #2
Is this supposed to change people's mind about tax dodgers? 99Forever Aug 2014 #3
So... I should still be paying Arizona taxes, even though I haven't lived there in 20 years? politicat Aug 2014 #9
Corporations are NOT people. 99Forever Aug 2014 #10
Hey, I don't agree with the law as it stands, either, but the law as it stands treats individuals & politicat Aug 2014 #11
I understand. He's dumping the first wife. nt valerief Aug 2014 #4
who is he? riverbendviewgal Aug 2014 #6
The Burger King. nt valerief Aug 2014 #7
RLOL riverbendviewgal Aug 2014 #8
I think that those that replied did not read the links riverbendviewgal Aug 2014 #5

Gidney N Cloyd

(19,841 posts)
1. "U.S. government... not providing the companies sewers or roads or courts or no-knock raids... "
Sun Aug 31, 2014, 10:07 AM
Aug 2014

On the other hand our military patrols half the world keeping it safe for American companies doing international business, with other countries' companies also benefiting.

unblock

(52,253 posts)
2. not quite true. for corporations, foreign income is taxed only if it is brought back into the u.s.
Sun Aug 31, 2014, 10:09 AM
Aug 2014

and therein lies a key loophole for many technically legal tax evasion strategy.

in the case of burger king, the plan is to transfer the "intellectual property" to a canadian entity, then the u.s. entity will pay an enormous fee to that canadian entity for "use" of that intellectual property, e.g., the "burger king" name.

that way, lots of profits actually generated in the u.s. are transferred to canada. see? burger king really makes a profit of millions of dollars in the u.s. on brand names and recipes and foor preparation and serving techniques developed in the u.s., but now they'll pay a "fee" to their canadian entity for all that now-canadiann know-how. and you can be certain that the "fee" will be very nearly equal to the profit that they would otherwise have to pay taxes on in the u.s.

so, magic, their u.s. entity is barely break-even, and virtually all their world-wide profit is taxed in canada instead.

99Forever

(14,524 posts)
3. Is this supposed to change people's mind about tax dodgers?
Sun Aug 31, 2014, 10:14 AM
Aug 2014

Corporations that built their wealth on the backs and infrastructure of the USA that then turn around and say "screw you America, we don't want to pay our fair share, we're moving out" are traitors and should be treated as such.

No excuses accepted.

politicat

(9,808 posts)
9. So... I should still be paying Arizona taxes, even though I haven't lived there in 20 years?
Sun Aug 31, 2014, 11:42 AM
Aug 2014

I was born in the Midwest, got military bratted around for several years, got the majority of my education (public k-12 and public university) in Arizona while my parents paid property, sales, sin and income taxes that supported my education.

I left three days after getting my degrees and have been back so rarely that I can count the number of days in twenty years on two hands. While I lived in Arizona, I never made more than $20K a year, but I paid my sales, sin, income and property (via my rent) taxes, just like everyone else. I now happily pay sales, property, sin and income taxes to the state where I live. I also massively multiplied my income by getting out of Arizona, but I never earned a cent of that income in Arizona, nor while I had a legal residence there, nor while I had any property there.

In your terms, Arizona provided me the tools to be a productive citizen, and therefore, is entitled to a permanent cut. Alimony, if you will, and that out of duty, I should be paying both the state where I live and earn my income and the state where I built my toolbox for the privilege of having my toolbox.

Really?

politicat

(9,808 posts)
11. Hey, I don't agree with the law as it stands, either, but the law as it stands treats individuals &
Sun Aug 31, 2014, 12:04 PM
Aug 2014

Corporations as legally similar entities. I'm as anti-corporate as they come -- I think only state charters, only for limited terms, with renewal not a given. Multinationals and even multi-state corps are dangerous entities, but current case law says they have similar if not identical rights as individuals. I don't agree with current case law, but we have to live with it until we manage to re-write it.

The issue I have is that the way we treat corporations does filter down to how we treat individual citizens. Case law matters here. Corporations who have moved from state to state have been sued by previous states for leaving (not for leaving messes, nor for back taxes, just for leaving. Boeing, for example). That case law exists, and could be used against individuals. The major reason that states don't use those rulings against individuals is that it's not worth the time and effort -- most citizens aren't worth the cost. That doesn't mean that someone won't decide to try. And what about individual corporations? There are thousands of individually and closely held small corporations who are effectively individuals with paperwork. For that matter, technically, I'm one (I have an llc for certain consulting work). Does that paperwork mean I'm not allowed to move?

The analogy of corporations continuing to pay taxes to the country of origin is based on personal law -- alimony. If corporations aren't people, then when they divorce, it shouldn't apply to them, and yet that's exactly what is being argued. The analogies are multi-layered, and it's all case law. It's all popcorn for future litigators to find.

riverbendviewgal

(4,253 posts)
5. I think that those that replied did not read the links
Sun Aug 31, 2014, 10:46 AM
Aug 2014

To each is own. As for Military...it is to protect AMERICAN INTERESTS

What is earned in a country should stay in that country.

People living elsewhere are NOT tax evaders...
They pay taxes in the country they live in and get services in.. and most do not plan to return to the USA.

I know - they can renounce...and they are doing it now.. as well as corporations

I left long ago, legally and I did file my US taxes... they were not complicated then as they are now. I could do them myself. and now it would be very costly $1000 to $5000 per year to prove I would not owe US taxes. My pension savings in the bank would be taxed. This is double taxation.

The USA and Eritrea are the only exceptional countries that have citizen based taxation. The rest of the World has resident based taxation. They do not have walls around their people like the USA is doing to its own.

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