Tilted Forum Project Discussion Community - View Single Post - Obama going after companies that earn money outside of the US and use offshore banks

ASU2003 · 05-04-2009, 03:51 PM

FT.com / US & Canada - Obama takes aim at US multinationals

http://www.nytimes.com/2009/05/05/bu...ef=global-home

This is one of those issues that I'm not sure he can win. Even I have a hard time with wanting companies based in the US to have to pay the foreign countries tax, and then have to pay a US income tax on the profits they made.

The way I figure that this is working is that company A that might be based in New York, has large sales in France let's say. The company pays the French tax on the profits(they do need to pay these right?), but instead of bringing that money that is left over back to the US, they use a Cayman Island bank account where they won't be taxed nearly as much a second time(if at all). They can then use this money to fund new expansion or advertising in any foreign country they want to. The US doesn't get any tax revenue from these multinational companies that are doing business outside of our borders (if they use this money outside of the US for business expenses or buy resort homes, yachts and private jets in these foreign countries) .

Is that right, or am I off in my understanding of this 'problem'?

Would they just not do business in the US at all if they sell $1 worth of stuff here they would have to pay taxes on every profit they made worldwide? Would companies that are based in the US start moving to Ireland or the Cayman Islands? Then again, how many corporate headquarters could you fit on those islands? Will we see these companies band together and create an nation of their own like Monaco or some other ultra-wealthy tax haven? I'm sure there would be some countries for sale.

Say what you will about Obama, but at least he is trying to do something. I think he bit off a little too much here though and he needs to come up with a simple tax code that could be used for this.

05-04-2009, 03:51 PM	#1 (permalink)
ASU2003 immoral minority Location: Back in Ohio	Obama going after companies that earn money outside of the US and use offshore banks FT.com / US & Canada - Obama takes aim at US multinationals http://www.nytimes.com/2009/05/05/bu...ef=global-home This is one of those issues that I'm not sure he can win. Even I have a hard time with wanting companies based in the US to have to pay the foreign countries tax, and then have to pay a US income tax on the profits they made. The way I figure that this is working is that company A that might be based in New York, has large sales in France let's say. The company pays the French tax on the profits(they do need to pay these right?), but instead of bringing that money that is left over back to the US, they use a Cayman Island bank account where they won't be taxed nearly as much a second time(if at all). They can then use this money to fund new expansion or advertising in any foreign country they want to. The US doesn't get any tax revenue from these multinational companies that are doing business outside of our borders (if they use this money outside of the US for business expenses or buy resort homes, yachts and private jets in these foreign countries) . Is that right, or am I off in my understanding of this 'problem'? Would they just not do business in the US at all if they sell $1 worth of stuff here they would have to pay taxes on every profit they made worldwide? Would companies that are based in the US start moving to Ireland or the Cayman Islands? Then again, how many corporate headquarters could you fit on those islands? Will we see these companies band together and create an nation of their own like Monaco or some other ultra-wealthy tax haven? I'm sure there would be some countries for sale. Say what you will about Obama, but at least he is trying to do something. I think he bit off a little too much here though and he needs to come up with a simple tax code that could be used for this. Last edited by ASU2003; 05-04-2009 at 03:54 PM..