A tax haven is a country that offers foreign corporations and individuals relatively low corporate and income tax rates, with a politically and economically stable environment. Some tax havens are Switzerland, Hong Kong, Bermuda, Ireland, and the Cayman Islands. The United States government has been fighting against the movement of corporations because it is not collecting taxes from these corporations that it could have used to reduce government debt. However, corporations have found loopholes that exempt them from United States tax laws. Companies are moving their headquarters across seas for tax benefits to keep their shareholders content. The United States government needs to reduce its corporate tax system so the country does not lose more companies, jobs, and money to foreign entities. Corporations have been moving to foreign countries for decades. Bermuda claims to be the first tax haven due to legislation passed in 1935 permitting offshore companies, however this claim to fame is debatable due to the similar legislation passed by Lichtenstein in 1926 to attract offshore capital. Switzerland also became a prominent tax haven after World War One. While other European countries had to raise their taxes to help pay off war debt, Switzerland, having been neutral in the war, had an influx of business. Originally tax havens were used to avoid personal taxation, but starting in the 1950’s companies have been moving to them because of new jurisdiction. The United States corporate tax rate is one of the highest tax rates in the world, at around 35 percent. Countries such as Switzerland and Ireland have become the new tax havens. Zug, Switzerland, a small, medieval mountain city, has a tax rate of fifteen to sixteen percent, whi... ... middle of paper ... ...bsnews.com/stories/2011/08/14/60minutes/main20091720.shtml>. Crump, Richard. "A Tempestuous History." Reactions (2008): 4-9. Business Source Premier. EBSCO. Web. 1 Oct. 2011. "Ireland top location for US Multinational Profits." Finfacts Ireland. Finfacts, n.d. Web. 9 Oct 2011. . Gurría, Angel. "Improve tax fairness and help the developing world." OCED. Organisation for Economic Co-operation and Development, 24/04/2009. Web. 9 Oct 2011. . Rahn, Richard W. "In Defense of Tax Havens." Wall Street Journal - Eastern Edition 18 Mar. 2009: A15. Academic Search Premier. EBSCO. Web. 1 Oct. 2011. Ruggeri, Amanda. "Obama Takes Aim at Offshore Tax Havens." U.S News And World Reports. 04/05/2009: n. page. Web. 9 Oct. 2011
The economy has been declining, and in an effort to help, the U.S offered massive tax breaks to companies who were willing to relocate there, this brought booming business, until the mainland began struggling and cut this program in 1996,
The United States taxes the worldwide earnings of its legal residents. (DEFINE INVERSIONS) However, after inversions, the government cannot impose taxes on most of the non-U.S. earnings of multinational corporations. It is true that some corporate inversions take place due to legitimate, non-tax, and business-related reasons. However, almost all of the corporate inversions, through skillful tax planning (or “legal manipulation,” as I like to dub it), allow U.S. multinational companies to avoid paying significant amounts of U.S. tax—both on income they earned prior to the inversion and on that they will earn in the future.
In this study I will use the cash effective tax rate (CASH ETR) as a proxy for corporate tax avoidance. Chen et al. (2010) use the cash effective tax rate as one of the measures of tax aggressiveness in their study. Another effective tax rate measure which has been widely used in tax avoidance research is the GAAP effective tax rate. However, the GAAP effective tax rate only reflects the permanent book-tax differences, while the CASH ETR reflects both the temporary and permanent book-tax differences (Chen et al. 2010). Moreover, the CASH ETR captures the tax benefits of employee stock options, while the GAAP effective tax rate does not (Dyreng et al. 2008). The CASH ETR also captures the strategies that are used to defer taxes while the GAAP effective tax rate does not (Hanlon and Heitzman 2010). The GAAP effective tax rate is also affected by changes in estimate while the CASH ETR is not. Therefore, Dyreng et al. (2008) conclude that t...
Williams, Kevin. "Historical Text Archive: Electronic History Resources, Online since 1990." Historical Text Archive: Electronic History Resources, Online since 1990. Donald J. Mabry / The Historical Text Archive, n.d. Web. 26 Mar. 2014. .
The United States tax system is in complete disarray. Republicans and Democrats agree that the current tax code is complex, unfair, and costly. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms (Armey 1). The main reason the tax system is so complex is because of the special preferences such as deductions and tax credits. Complexity in the current tax system forces Americans to spend 5.4 billion hours complying with the tax code, which is more time than it takes to manufacture every car, truck and van produced in the United States (Armey 1). Time is not the only thing that is lost with the current tax system; Americans also lose great deal of money complying with the tax code. Resources that are currently wasted on record keeping, filing forms, learning the tax code, litigation, and tax avoidance. The cost of complying with the current tax code totals about $200 billion annually, or $700 for every man, woman, and child in America (Armey 1). The overwhelming consensus that the current tax system is inadequate has ignited the search for tax reform. There are numerous proposals for tax reform; one particular proposal brought forth by various conservatives is the idea of national flat rate income tax. The idea is to replace the current income tax with a single rate that everyone pays.
Adams, Scott. "How to Tax the Rich." The Wall Street Journal. The Wall Street Journal, 30 Jan 2011. Web. 25 Nov 2013.
Sanandaji, Tino, and Arvid Malm. "Raising Taxes Will Not Resolve the Budget Deficit." The US Deficit. Ed. Kathy Jennings and Lynn M. Zott. Detroit: Greenhaven Press, 2013. Opposing Viewpoints. Rpt. from "Obama's Folly: Why Taxing the Rich Is No Solution." http://www.american.com/archive/2011/august/obamasfollytaxingtherich/article_print. 2011. Opposing Viewpoints in Context. Web. 7 Feb. 2014.
Taxes in the United States include payroll taxes, property taxes, sales taxes, and a multitude of others. These taxes may be imposed on individuals, business entities, estates, trusts, or other forms of organizations. In general, there is a lot of inquiry on the current tax system. With endless loopholes, a regressed economy, and corruption there has been widespread anger on the current structure of taxation. Consequently, the wealthy have managed to become even richer despite the economic crisis. Furthermore, many taxpayers in the upper class have found loopholes to avoid substantial taxation or otherwise known as tax evasion. (Stewart 2013) Tax evasion has only grown over the years and with the national debt has become a major issue. What is more, is the intense complexity of the entire taxation process. Addressing all the issues and problems regarding the taxation structure is a meticulous and arduous process. With this in mind, politicians from both parties have tried to address individual issues within the taxation paradigm. Being that the United States has the highest corporate tax in the globe, politicians have tried to change policy regarding taxation on businesses. (Sullivan 2013) How...
There are 3 types of corporate income taxes as follows: National 30% of taxable income, Local 20.7% of National Tax, and Enterprise 10.08% of taxable income. The calculated effective tax rate of 42.05% although they simply add up to 46.29% (30.0% + 30.0%X20.7% + 10.08%). It is because Enterprise tax is deductible for the other tax purposes only when it becomes due. Tax evasion involves fraudulent or criminal behavior, conduct involving deception, concealment, or destruction of records. Tax evasion occurs when the taxpayer fraudulently or criminally avoids the payment of taxes otherwise due and owing under the tax laws. There are many tax crimes under the Internal Revenue Code. The criminal violations cover the same territory as the civil fraud penalties, although the government has a higher burden of proof in the criminal cases. The criminal cases, however, reach a far greater spectrum of potential defendants. Unlike the civil penalties which target only the taxpayer, the criminal penalties reach anyone engaging in the defined offense, including employees, accountants, lawyers and tax preparers. Under IRC Sec. 7206(2), a person is guil...
The four types of taxes this paper will discuss are income tax, sales tax, property tax, and user fees. Income tax was not permanently established until the 16th Amendment was passed in 1913. Most federal taxes had been previously derived from excise taxes on tobacco and alcohol and other consumer goods. The US Constitution, when written and still continues to, legitimize taxation in the United States through Article I, Section 8, that Congress has the power to lay and collect taxes, duties et al, pay the debts or provide for the common defense and general welfare of the United States (Cornell Law LII). Investopedia defines income tax as ‘a tax government(s) impose on financial income generated by all entities within their jurisdictions (Investopedia, 2014). Businesses and individuals are required to file an income tax return every year to determine if they owe taxes or qualify for a refund. That is determined by measuring the total income one earns to a designated tax rate, calculating one’s taxable income, which are some or all items of income reduced by other adjustments or expenses in that tax year. There are different subcategories of income tax; there is a federal income tax that is set by the federal government, apart from a few states, there is a state income tax that is imposed on their respective residents, as well as the possibility of there being local income tax ...
Balaam, David. Introduction to International Political Economy, Upper Saddle River, New Jersey, Pearson Education, 2005.
corporate income tax rate. Statistics estimate that American companies keep sixty percent of their cash overseas and untaxed, some $1.7 trillion, according to a U.S. Senate HSGAC Permanent Subcommittee on Investigation (Hickey 1). Tax haven countries are recognized for having lower corporate income tax rates, making them extremely desirable locations for MNCs to have their foreign holding companies. What’s more, these holding companies are known for holding intellectual property rights in the tax haven countries that do not abide by U.S. tax
Dimitter, Lowell. World Politics. 1st ed. Vol. 55. New York: Johns Hopkins UP, 2002. 38-65.
Jones, G.G. (2005), "Multinationals from the 1930s to the 1980s", chapter 3 in A.D. Chandler and B. Mazlich (eds.), Leviathans: Multinational Corporations and the New Global History, New York: Cambridge University Press.
Tax expenditures are popularly known as tax loopholes or tax breaks. It departures from the normal tax structure and ...