American companies looking to escape Uncle Sam

Le Monde (translated in English):

In the United States, the term Uncle Sam refers to the IRS.

When we look at the problem of tax evasion, the American situation deserves attention. It is not fraud … but shortfall for the United States Treasury. But this rétiscence Treasury is legitimate?

Pay when repatriated

U.S. tax authorities, otherwise so quick to attack their citizens in Switzerland or elsewhere, or to use foreign banks as tax officer, before they have an opportunity they would understand this is all the more ironic that the principle of universal taxation applies to American taxpayers, but not businesses.

Indeed, it is only when foreign profits are repatriated to the United States to become taxable. Clearly, foreign profits beyond Uncle Sam. Companies use this mechanism perfectly legally. Cash American companies outside the United States are estimated at $ 2,500 billion. They can, without taxation, use them to their international activities.But these funds are lost to the American economy.

For example, Apple has cash to 25 billion, had to borrow money to pay a dividend, it is cheaper to pay interest as repatriating cash and see taxed. Microsoft has $ 80 billion in cash.

All this is not new as there are countries such as Ireland, where corporation tax is 10%, why these benefits would they charge for the year in the United States?

Invest and relocate?

This would be an academic debate whether the new fashionable idea was not for American companies to acquire companies abroad, and make the parent group, the American subsidiary seeing now taxed only on profits in the United States. This is what we call here the “inversion”.

This is the failed attempt to Astra Zeneca acquisition by American Pfizer is behind this unrest. The ineffable US Treasury Secretary, Jack Lee, wrote to the Senate asking it to ban these operations and appeals to economic patriotism businesses.Incompetence or complicity? Electoral calculation? This phenomenon is not new, but it seems to worry the White House. Obama speaks of “economic deserters.” There is no perfect answer to this threat.

 

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