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Business Insider: Corporations may dodge billions in U.S. taxes through new loophole: experts

MTAtech

MTAtech

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Corporations may dodge billions in U.S. taxes through new loophole: experts

WASHINGTON (Reuters) - A loophole in the new U.S. tax law could allow multinational corporations like Apple Inc to avoid paying billions of dollars in taxes on profits stashed overseas, according to experts.

Stemming from a Republican overhaul of international business taxes, the loophole involves the tax rates - 15.5 percent or 8 percent - that companies must pay on $2.6 trillion in profits they are holding abroad.

By manipulating their foreign cash positions, a determining factor under the new law, a U.S. multinational could potentially save money by shifting profits to the lower rate from the higher one, according to Stephen Shay, a senior lecturer at Harvard Law School.
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Nobody (except everybody) could have predicted that a thousand-page bill written in a few days with no hearings would be full of loopholes.
 
Fletch said:
Right. Because prior to this bill, the tax code had no loopholes.
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The prior tax-bill had intentional language but there for whatever reason. This hastily written bill has all kinds of language that does things that were not intended. In this case, allows corporations to make all kinds of tax avoidance that wasn't the objective of Congress. That's what a loophole is.
 
Lutherf said:
How much tax were they paying on those overseas funds before? Does "nothing" ring a bell?
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The article said, "The savings could amount to more than $4 billion in Apple's case alone."
 
That is due to the change in the tax rate designed to get them to bring that capital back to the USA.

What fries my grits, Is Apples new HQ is a five billion dollar write-off. I’m all for write offs for plant and equipment, but there comes a point at which excess spending on lavish HQ’s should be looked at.
 
MTAtech said:
The article said, "The savings could amount to more than $4 billion in Apple's case alone."
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If you read the article that "savings" is as compared to repatriating those funds under current law. Current law is why those funds are over there in the first place.
 
MTAtech said:
Corporations may dodge billions in U.S. taxes through new loophole: experts


Nobody (except everybody) could have predicted that a thousand-page bill written in a few days with no hearings would be full of loopholes.
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I'm no accountant or tax guy, but I don't see the problem.

Shay said some multinationals could reduce their cash positions, and the amount of money subject to the higher rate, through legitimate distributions including dividend payments.
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So...if a corp did this, then they don't have the cash anymore, right? Someone else does. That someone else might be someone who will pay US taxes...maybe at a higher rate? In any case, this loophole will have the desired effect of getting the money back to the States...or at least, most of it.
 
Let's call this "The Dollar That Got Away". The democrats want to capture it and send it off to some rathole country that has democrats who want to immigrate.
 
chuckiechan said:
That is due to the change in the tax rate designed to get them to bring that capital back to the USA.

What fries my grits, Is Apples new HQ is a five billion dollar write-off. I’m all for write offs for plant and equipment, but there comes a point at which excess spending on lavish HQ’s should be looked at.
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Do we have a shortage of money in the US? If so, how is the stock marking going up so much? Are banks short on money?

If we have a money shortage, then why dont we just print more?
 
MTAtech said:
The prior tax-bill had intentional language but there for whatever reason. This hastily written bill has all kinds of language that does things that were not intended. In this case, allows corporations to make all kinds of tax avoidance that wasn't the objective of Congress. That's what a loophole is.
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How do you know it wasn’t intended

Repatriating these profits has been a priority for years

And zero was what we were collecting before.....

Now we are getting 8%....win....
 
imagep said:
Do we have a shortage of money in the US? If so, how is the stock marking going up so much? Are banks short on money?

If we have a money shortage, then why dont we just print more?
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Are you saying there aren’t places es where investments would help?

Wow...didn’t realize our country was so well funded in every area
 
gdgyva said:
Are you saying there aren’t places es where investments would help?

Wow...didn’t realize our country was so well funded in every area
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Sure investment would help. But holding money doesnt equal investment. If a profitable company sees a business opportunity, they should be able to raise the money to expand into that area. We have no lack of US Dollars, our government makes more dollars every year, and bank loans are effectively self funding (the resulting deposit of the proceeds of the loan funds the loan).
 
MTAtech said:
Corporations may dodge billions in U.S. taxes through new loophole: experts


Nobody (except everybody) could have predicted that a thousand-page bill written in a few days with no hearings would be full of loopholes.
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Im guessing you think this is a bad thing, but it isnt. The less taxes corps pay, they better it is for consumers, employees, and investors. The only bad thing here is the time and money theyre spending exploiting these loopholes, but its a net savings.
 
jonny5 said:
Im guessing you think this is a bad thing, but it isnt. The less taxes corps pay, they better it is for consumers, employees, and investors. The only bad thing here is the time and money theyre spending exploiting these loopholes, but its a net savings.
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Glad to see you reverse your position on debt, deficits, and your favorite topic... the spooky debt ceiling!
 
jonny5 said:
Im guessing you think this is a bad thing, but it isnt. The less taxes corps pay, they better it is for consumers, employees, and investors. The only bad thing here is the time and money theyre spending exploiting these loopholes, but its a net savings.
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While lower corporate tax is good for investors, whose ownership of stocks are concentrated in the top 1%, lower corporate taxes have no effect on consumers or employees and a negative effect on tax-payers -- who now have to make up the revenue difference that corporations formerly paid.

Anyone who thinks that lower corporate taxation results in cheaper product costs for consumers, doesn't know economics. We covered all of this years ago, here.

Also, there is no evidence that corporations invest more when they get a tax break.
 
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MTAtech said:
Anyone who thinks that lower corporate taxation results in cheaper product costs for consumers, doesn't know economics. .
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No point in continuing this debate then, since youre answer to anything will be 'NOPE, youre ignorant'.
 
Lutherf said:
If you read the article that "savings" is as compared to repatriating those funds under current law. Current law is why those funds are over there in the first place.
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You're giving a TDS liberal facts that don't feed their hate. This will be ignored by every TDS liberal.
 
MTAtech said:
The prior tax-bill had intentional language but there for whatever reason. This hastily written bill has all kinds of language that does things that were not intended. In this case, allows corporations to make all kinds of tax avoidance that wasn't the objective of Congress. That's what a loophole is.
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What makes you think that they were unintended?
 
GDViking said:
What makes you think that they were unintended?
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Because I can't believe that Congress can be that insidious but I do think they can be that stupid. I can be wrong.
 
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