August 14, 2011 12:38 PM
American companies are finding new overseas tax havens to legally protect some of their profits from the U.S. tax rate of 35 percent, among the highest in the world. Lesley Stahl reports.
The new tax havens
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See all 31 CommentsYou do bring out some very relavant points. I am an American who have been working overseas for a long time, and did see a lot of this coming. In many cases the high corporate tax rate in the USA is a major disincentive for any company to do business in the USA, especially with a very low tariff structure in the USA for imports. Yes, manufacturing labor is 2 bucks an hour in China (versus # 25.00 an hour in the USA), an Indian engineer can be had for $ 20,000.00 a year, versus a $ 100,000.00 a year in the USA for an American engineer, corporate taxes are 12 percent in Ireland, and even less where I work (Saudi Arabia, it is at the Zakat rate which I think is 6 percent for foreign companies).
When I was between overseas contracts, I attempted to open an engineering consulting business in the USA, and eventually had to fold the business due to four factors, which are 1) no viable solid work in my area of the profession, 2) taxes, especially business and occupation taxes in the state where I was going to open the business, 3) skyrocketing health insurance costs and 4) my competitions prevalent use of Indian engineers and the work farmed out to India. I lost a lot of startup money in that failed business venture, and a such, had to return back to work overseas.
There are many things that America must do to regain its competitive stand on the world stage. One of these is to have a competititive tax structure. If say other countries corporate tax rates average 20 percent, but has a top individual tax rate of 45 percent (as indicated in Germany), so be it, it should be adopted to bring jobs back to America. Many countries now have a VAT structure which provides for basic social programs, and that seems to work.
If you are an individual, and have money in Switzerland where you reside are required to report it and pay taxes on it. Actually it doesn't matter if you live there or not. If the money is there, you have to report and pay taxes to the IRS. Now why doesn't the same principle apply to Corporations? They are persons, as defined by the Supreme Court, so shouldn't they pay too? Or alternately, shouldn't individuals residing in Switzerland have the same privilege as Corporations?
Right now the IRS is on a witch hunt for those who have money overseas and not paying taxes on it, or filing a very obscure little form called an FBAR. It is doing some major harm to Expats and to immigrants, and at the same time Corporations are left touched by this pain. Now there is a story for you, CBS, if you really want to dig into something....
Try reading this...and really do some investigative reporting...
http://federaltaxcrimes.blogspot.com/2011/07/indian-american-groups-push-for-foreign.html
or this...
http://hodgen.com/yet-another-ovdi-victims-story/
Oh, never mind... it is too boring and only the smalls guys getting hurt, so what do you care...
PS... I do believe that Corporate tax rates need to be lower, and I too believe that we have too many lower income folks in America not paying any taxes at all. There needs to be a fairer and simpler system, and all have to participate, but fat chance of that happening in our lifetime.
The only answer is to change our tax laws to be on par with the other countries. Lower corporate tax rates while finding other revenue sources, principally consumption taxes, like a national sales tax and gas tax. Jobs will flow back into this country in short order.
Please stop making large corporations the bad guys here. They are only doing what everyone else should be doing - finding the most effective ways to legally minimize their taxes. It is the job of Congress to modify the tax code to optimize collections.
Watched your report on "How to shift Profits". I have only ONE question which I believe would resolve a major share of our government's tax problems; "Why does the government tax profits?" I have never understood the threory behind taxing profits. I suggest that a study be prepared based on taxing Sales Revenue. Such a tax to equal the same current business tax revenue would be in the range of 6% on sales revenue. All companies would pay the flat amount and this tax would be built into the price of any product since it is an across the board tax paid by all companies. In addition, the tax would not affect financial operating statements as it would be a collect and pay tax recorded on the balance sheet. Also, the tax would be fair for ALL companies including off shore companies. It would not be necessary to attempt to track or determine a companies profit. Instead the companies sales revenue would be tracked. If a company refused to provide sales information than simply go to the customers through shipping documents and other instruments and charge the tax. By so doing companies that make large profits keep them. The necessity to move overseas to avoid taxation is removed. One simple rule would apply; "Sold in the US taxed in the US." Finally, since sales revenue is not as volital as profits the amount of tax revenue going to the government would stabilize. If inflation runs at approximately 3% the government could anticipate a similar increase in tax revenue. Isn't it time to rethink the tax system and propose a new approach that is fair to all and responsible to all. I have several examples and additions to bring this theory into focus,I only want to present the idea of a new approach to our tax system.
Thank you.
researched "Grace Commission Report" which revealed that 100% of what the private corporation we know as IRS, delivers what it extorts to the Federal Reserve as rental payment for our use of the private commercial paper that we have in our pockets, better known as Federal Reserve Notes, but actually instruments of the corporate indebtedness of the corporate Federal Government, you know, the corporation created(28 USC 3002(15)by the people to do the business of the REPUBLIC. Get real, 15 Statutes at Large, Chapter 249 provides the LAWFUL expatriation of any one, man or fiction. Eliminate the Fed and there will be no need for IRS. Not one penny of what IRS collects funds any part of our corporate government! Leslie should understand that the $60 Billion she "discovered" would go to the Federal Reserve Bank, not the United States Treasury!
researched "Grace Commission Report" which revealed that 100% of what the private corporation we know as IRS, delivers what it extorts to the Federal Reserve as rental payment for our use of the private commercial paper that we have in our pockets, better known as Federal Reserve Notes, but actually instruments of the corporate indebtedness of the corporate Federal Government, you know, the corporation created(28 USC 3002(15)by the people to do the business of the REPUBLIC. Get real, 15 Statutes at Large, Chapter 249 provides the LAWFUL expatriation of any one, man or fiction. Eliminate the Fed and there will be no need for IRS. Not one penny of what IRS collects funds any part of our corporate government !
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