{"id":2146,"date":"2004-02-24T22:56:02","date_gmt":"2004-02-25T02:56:02","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/dbnews\/2004\/02\/24\/advantage-to-the-multinationals\/"},"modified":"2004-02-24T22:56:02","modified_gmt":"2004-02-25T02:56:02","slug":"advantage-to-the-multinationals","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/2004\/02\/24\/advantage-to-the-multinationals\/","title":{"rendered":"Advantage to the Multinationals"},"content":{"rendered":"

<\/a><\/p>\n\n\n
\n

Anyone with a more than passing knowledge of the US tax system and
\n the Federal budget realizes that the far majority of government spending
\n comes directly from the paychecks of US workers. In fact, businesses
\n and corporations, whose total incomes actually exceed the total incomes
\n of all of America’s workers, account for LESS THAN 10% of total US taxes
\n collected. This is down from about a quarter of all tax receipts 50 years
\n ago.<\/p>\n

If the business of America is Business, how come the businesses pay
\n so little of the operating costs for the ongoing operation of our national
\n enterprise? Could it have anything to do with corporate sponsorship of
\n the political system, soft-money funding of lawmakers campaigns, constant
\n and concerted lobbying to reduce the tax load on companies or the efforts
\n of legions of lawyers and MBAs to create, discover and exploit loopholes,
\n shelters and technically legal scams to save big bucks for business?<\/p>\n

An informative article in today’s Boston
\n Globe<\/a> details how globalization,
\n outsourcing and job migration are further degrading the government’s
\n ability to collect a fair share of taxes from businesses and corporations. <\/p>\n

When a company moves part of their operation off-shore, be it manufacturing,
\n assembly, distribution or services, the resulting production is still
\n part of the Gross National Product, as it has been created by a US entity.  However,
\n it is usually subject to the local, non-US tax system, and unless the
\n final profits are repatriated the US government can’t get their hands
\n on any of the resulting cash flow.  <\/p>\n

For this reason, not only is Bermuda, with its 3% effective corporate
\n tax rate, an attractive haven, but seemingly reputable countries like
\n Holland (8.9%), Luxembourg (0.9%) and Ireland (7.5%) can represent billions
\n in savings for companies which manage to locate some of their profit
\n centers there. <\/p>\n

There are several "legal" techniques for relocating profit centers to
\n countries with lower tax rates. An American company can transfer a trademark
\n or copyright to a foreign affiliate
\n so that all of the profit generated by that intellectual property is
\n taxed at a low rate.  The American mother company can sell its products
\n at low or no profit to a foreign subsidiary which then sells them on
\n the local market or re-exports them to a third country at a hefty markup,
\n leaving the resulting profit to be taxed at the lower foreign rate.<\/p>\n

As further evidence of the sacrifice of patriotism to profits, the Globe
\n reports that nearly half of the $233 billion US corporations earned abroad
\n in 2001 were never brought back to the US where they could be taxed,
\n but instead were held in foreign tax havens.<\/p>\n

\n

Commerce Department data from December illustrate the challenge facing
\n tax officials. The figures show that corporate earnings held in offshore
\n tax havens like Luxembourg or the Cayman Islands have doubled over the
\n last 15 years. Those two countries have tax rates of 0.9 percent and
\n 5.2 percent, respectively, compared with 28 to 35 percent in the United
\n States.<\/p>\n<\/blockquote>\n

from the Boston Globe<\/a><\/p>\n<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Anyone with a more than passing knowledge of the US tax system and the Federal budget realizes that the far majority of government spending comes directly from the paychecks of US workers. In fact, businesses and corporations, whose total incomes … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":299,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1443],"tags":[],"class_list":["post-2146","post","type-post","status-publish","format-standard","hentry","category-esl-links"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/posts\/2146","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/users\/299"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/comments?post=2146"}],"version-history":[{"count":0,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/posts\/2146\/revisions"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/media?parent=2146"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/categories?post=2146"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/tags?post=2146"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}