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[Bjomesphat]

why is it greedy to want to pay less tax? Who volunteers to pay more?

Dude this is NeoGAF. I've literally seen people on this board happy to pay more taxes.

 

[TAJ]

Btw why does the OP say they now are free from paying taxes? From what it says it seems a reduction of 8%?

It's a 32% reduction.

 

[Bradach]

They usually have board committees that meet separately that can handle some things. I think if the shareholders want the CEO to chair the meetings, it shouldn't be prohibited. The same votes that control the selection of the chair control the selection of the CEO anyway.

The committees each have their specific roles and they report their findings / decisions to the board so that is no safeguard.

Ultimately its the board that is meant to protect the shareholders from poor management of the company, including unethical behavior of the exec team.

There is a clear conflict of interests with having the CEO of a company in the role of the chairman who is leading the team that is meant to police the CEO and his execs.

 

[Chichikov]

That's an odd sentiment--in almost all developed countries with socialist policies like free university and health care, the corporate tax rate is almost always very low (most are lower than the US rate), and definitely lower than individual income tax rates. They also usually have a national VAT/GST.

Corporate taxes are a weird beast, in theory you wouldn't need them because corporations will just end up paying it to people and that would be taxed as income.
The problem is that those companies sit on mountains of cache, and idle capital is the first thing you want to tax, since it's doing nothing. But they keep doing it since CEO get compensated on shareholder value, and wall street love cache reserves.
Ideally, the main goal of corporate taxes should be to encourage corporation to reinvest their profits, not so much to generate revenue (it's pretty small piece of the pie anyway).

And just so we're clear, that deal is fucking bullshit, under the current tax code (unlike my imagined one) those fuckers should be paying more.

VAT/GST is an abomination that should abolished everywhere.

 

[Y2Kev]

If by "cache" you mean cash, then I don't agree. CEOs are routinely punished for sitting on cash reserves, which is why they are pressured by shareholders (and especially activist investors) to return capital in the form of dividends, share repurchases, and M&A activity. Wall Street hates idle cash, particularly in this interest rate environment. Corporates have been accumulating large stores of cash precisely because of the US taxation regime, which results in cash piling up offshore that can't be used for financing in the US.

The reality is this move actually does nothing to Pfizer's actual US tax owed by itself. Earnings earned in the US will continue to be taxed by US tax authorities. The real benefit of the deal is that earnings earned abroad will now no longer be subject to US taxation, which means they will be able to use the cash wherever they want without tax penalty. That means more aggressive M&A, dividends, and share repo! More cash being doled out to shareholders. Currently, Pfizer (and basically every international company) has trapped cash essentially everywhere outside the US. Demands for cash in the US are enormous-- share repo, dividends, M&A-- and they don't have access to any of it. That's why you see companies doing tons of debt financed shareholder returns.

Pfizer already confirmed on the investor call yesterday they will distribute 50% of adjusted net income in the form of dividends! That's huge. Other inverted companies, like Medtronic, have publicly promised 50% of ALL Free Cash Flow to be returned to investors.

Realistically, what will happen is that Pfizer will load its US subsidiaries up with debt via intercompany loans to Irish entities that own IP and the interest on those loans will be tax deductible. That's how they will lower their effective tax rate globally.

I think what the government needs to do is fix the tax code. Obviously this move isn't OMG I LOVE IT but the system is broken. They're not the first and they won't be the last. Foreign earnings by US corporates have been taxed by the IRS but collecting said tax is deferred until the earnings are brought home, so that stuff never got collected anyway.

Allergan is also a fantastic company so I think there's a solid industrial logic here. It's not purely a taxation move.

edit: Also the reverse merger is nothing new or phony. In pharma in particular it was used when Merck acquired Schering-Plough a while back.

 

[Friggz]

I honestly dont see it as bad at all. Im not a fan of tax, i havent paid any for the last 11 years since i moved from Australia. I think all these forms of tax arent great, but high corporate taxes actively incentivise companies to either move abroad or do what Pfizer does here.

I dont see it as greedy or scummy - i just see it as a smart business move.

I say things like environmental coverups on oil spills or what VW did with their emissions test as "scummy" - this is just doing business properly.

How you can afford all those high end headphones now makes sense .

 

[eznark]

Smart move, good job. Pfizer has one of the more impressive, serious and involved boards in the industry though so it's not a huge surprise.

 

[numble]

You sure? Socialist countries spark higher corporate tax rates.

I am pretty sure. Can you name some socialist countries?

Corporate taxes are a weird beast, in theory you wouldn't need them because corporations will just end up paying it to people and that would be taxed as income.
The problem is that those companies sit on mountains of cache, and idle capital is the first thing you want to tax, since it's doing nothing. But they keep doing it since CEO get compensated on shareholder value, and wall street love cache reserves.
Ideally, the main goal of corporate taxes should be to encourage corporation to reinvest their profits, not so much to generate revenue (it's pretty small piece of the pie anyway).

And just so we're clear, that deal is fucking bullshit, under the current tax code (unlike my imagined one) those fuckers should be paying more.

VAT/GST is an abomination that should abolished everywhere.

I agree with Y2Kev that it is the other way around--the piles of cash are accumulating because the tax regime would punish them from using it. Shareholders do not reward idle cash.

VAT/GST is not an abomination.

Unlike sales tax which only apply to a retail consumer purchasing goods, it also taxes businesses on their purchases and applies to every step of the supply chain, expanding the tax base. It only taxes the value-added portion, which limits cascading taxes that would happen if you tried a sales tax.

Unlike sales tax which only apply to a retail consumer purchasing goods, it also taxes services, purchase of real estate, licensing of IP, and nearly any type of transaction, expanding the tax base.

In many countries, harmful effects are mitigated by exempting things like food, medicine and education, turning into a de facto luxury tax for individuals and tax on business transactions.

In many countries, it is used to redistribute wealth. Canada pays money to lower income individuals and households as part of its VAT/GST-like system.

 

[Kill3r7]

If by "cache" you mean cash, then I don't agree. CEOs are routinely punished for sitting on cash reserves, which is why they are pressured by shareholders (and especially activist investors) to return capital in the form of dividends, share repurchases, and M&A activity. Wall Street hates idle cash, particularly in this interest rate environment. Corporates have been accumulating large stores of cash precisely because of the US taxation regime, which results in cash piling up offshore that can't be used for financing in the US.

The reality is this move actually does nothing to Pfizer's actual US tax owed by itself. Earnings earned in the US will continue to be taxed by US tax authorities. The real benefit of the deal is that earnings earned abroad will now no longer be subject to US taxation, which means they will be able to use the cash wherever they want without tax penalty. That means more aggressive M&A, dividends, and share repo! More cash being doled out to shareholders. Currently, Pfizer (and basically every international company) has trapped cash essentially everywhere outside the US. Demands for cash in the US are enormous-- share repo, dividends, M&A-- and they don't have access to any of it. That's why you see companies doing tons of debt financed shareholder returns.

Pfizer already confirmed on the investor call yesterday they will distribute 50% of adjusted net income in the form of dividends! That's huge. Other inverted companies, like Medtronic, have publicly promised 50% of ALL Free Cash Flow to be returned to investors.

Realistically, what will happen is that Pfizer will load its US subsidiaries up with debt via intercompany loans to Irish entities that own IP and the interest on those loans will be tax deductible. That's how they will lower their effective tax rate globally.

I think what the government needs to do is fix the tax code. Obviously this move isn't OMG I LOVE IT but the system is broken. They're not the first and they won't be the last. Foreign earnings by US corporates have been taxed by the IRS but collecting said tax is deferred until the earnings are brought home, so that stuff never got collected anyway.

Allergan is also a fantastic company so I think there's a solid industrial logic here. It's not purely a taxation move.

edit: Also the reverse merger is nothing new or phony. In pharma in particular it was used when Merck acquired Schering-Plough a while back.

Nailed it. Very similar to the Merck merger although IIRC the driving force behind that merger was vorapaxar.

 

[purvispisgah]

Praise capitalism
Geez

A corporation is a legal distinction that exists because of government regulation. The very concept of a corporation is anathema to capitalism, and at high levels like this are cronyism through and through.

Individuals are often so quick to blame the concept of capitalism for stories like this, as if this is all happening independently of the state. This is the state in action.

 

[David Incorporated Esq.]

If by "cache" you mean cash, then I don't agree. CEOs are routinely punished for sitting on cash reserves, which is why they are pressured by shareholders (and especially activist investors) to return capital in the form of dividends, share repurchases, and M&A activity. Wall Street hates idle cash, particularly in this interest rate environment. Corporates have been accumulating large stores of cash precisely because of the US taxation regime, which results in cash piling up offshore that can't be used for financing in the US.

Last I checked Apple was sitting on $20B of cash reserves in America, with $180B overseas. If you're sitting on $20B in cash already I don't see a strong argument for reduced taxation on another $180B being an incentive for reinvestment.

Ultimately I'm not a fan of corporate taxes, and would rather see effective taxation on the returns to shareholders and executives. Though truth be told I'm not familiar enough with the specific mechanics of what is and isn't taxed at that level to form a strong opinion.

 

[low-G]

I honestly dont see it as bad at all. Im not a fan of tax, i havent paid any for the last 11 years since i moved from Australia. I think all these forms of tax arent great, but high corporate taxes actively incentivise companies to either move abroad or do what Pfizer does here.

I dont see it as greedy or scummy - i just see it as a smart business move.

I say things like environmental coverups on oil spills or what VW did with their emissions test as "scummy" - this is just doing business properly.

Then you are an idiot. How is it in your best interest to support international corporations, when you could be benefitting from the tax dollars they would be forced to spend. Or do you now live in Somali to avoid taxes and thus it doesn't matter to you either way?

I see you live in Dubai. So why not side on the behalf of the majority, rather than shareholders? Oh, because you're immoral and think the rich are more worthy than the poor, got it.

 

[Famassu]

yes. Following laws makes me Mr Pfizer. Well done.

Yes, because laws that allow tax evasion are so perfect & absolute. It might not be against the (current) laws, but it's still disgusting from a moral POV. These companies are already making super massive profits from the suffering of people. It's pure greed from everyone involved to want to have even more money while paying even less back to the society that lets them exist & provides all that money to them.

 

[shadowsdarknes]

So what? they are following the law and being more profitable - they are paying taxes, the amount the law specifies right? so what is wrong with this and why are they being greedy?

Their responsibility is to the board and shareholders - that means maximising profits - so this move will mean less taxes and more money for them.

I don't think anyone would argue that they literally can't do this. But just because they can do something, doesn't mean it isn't unethical. Being a good corporate citizen does actually matter.

 

[SomedayTheFire]

Yes, because laws that allow tax evasion are so perfect & absolute. It might not be against the (current) laws, but it's still disgusting from a moral POV. These companies are already making super massive profits from the suffering of people. It's pure greed from everyone involved to want to have even more money while paying even less back to the society that lets them exist & provides all that money to them.

This is not tax evasion.

 

[numble]

Last I checked Apple was sitting on $20B of cash reserves in America, with $180B overseas. If you're sitting on $20B in cash already I don't see a strong argument for reduced taxation on another $180B being an incentive for reinvestment.

Ultimately I'm not a fan of corporate taxes, and would rather see effective taxation on the returns to shareholders and executives. Though truth be told I'm not familiar enough with the specific mechanics of what is and isn't taxed at that level to form a strong opinion.

Like the inverted companies prior to inversion, the math doesn't work out on a dividend from the overseas cash. If they wanted to pay out a $100 billion dividend, that would be a $35 billion tax hit, and the shareholders take a income tax hit of ~30%, which means that $100 billion turns into $45 billion after individual income taxes on the dividend. So they earned $100 billion but that is worth $45 billion in the hands of the investor. Not really a smart move. Might as well buy some overseas companies or re-invest in your overseas supply chain.

If there was no tax hit on the $100 billion overseas, the $100 billion in overseas income does not take the corporate tax hit on repatriation, and then is $70 billion after individual income taxes on the dividend. A much better value to the company and the shareholder.

 

[Vagabundo]

I'm ok with this.

600 mill for me, thank you very much.

SORT OUT YOUR CORPORATE TAXES US.. haha

 

[Christopher]

And they sure as hell shouldn't be paying lower taxes than me.

You are just so off the mark all the time

 

[Y2Kev]

Last I checked Apple was sitting on $20B of cash reserves in America, with $180B overseas. If you're sitting on $20B in cash already I don't see a strong argument for reduced taxation on another $180B being an incentive for reinvestment.

Ultimately I'm not a fan of corporate taxes, and would rather see effective taxation on the returns to shareholders and executives. Though truth be told I'm not familiar enough with the specific mechanics of what is and isn't taxed at that level to form a strong opinion.

Apple is a pretty good example of a company in the debt markets to finance a dividend and share repurchase program. The yield on their debt is much less than the tax hit they'd have to pay. I don't know what apple's liquidity profile is like because I don't know Apple at all, but I imagine a lot of their us cash is not invested in short term cash deposits and is probably tied up in corporate securities.

Their share repo program is 140 bn though so obviously us cash is not sufficient anyway.

 

[Irobot82]

edit: wrong thread.

 

[PeskyToaster]

Pretty big deal. I have some Pfizer stock because family members used to work for a company they acquired so now I guess I have shares of this company now. I haven't checked on it's value in a while.

 

[David Incorporated Esq.]

Apple is a pretty good example of a company in the debt markets to finance a dividend and share repurchase program. The yield on their debt is much less than the tax hit they'd have to pay. I don't know what apple's liquidity profile is like because I don't know Apple at all, but I imagine a lot of their us cash is not invested in short term cash deposits and is probably tied up in corporate securities.

Their share repo program is 140 bn though so obviously us cash is not sufficient anyway.

I'm not that familiar with the high level financial side of this discussion, but I generally use Apple as a counter-example to the idea that one of the things holding companies back from reinvesting in American jobs is the taxes they'd have to pay to bring the money back from overseas. That they have $20B in US cash reserves as it stands shows that they see no value in investing in capital expansion, so allowing more money back into the states would have a very low impact on economic/jobs growth relative to the money lost in taxation.

Like the inverted companies prior to inversion, the math doesn't work out on a dividend from the overseas cash. If they wanted to pay out a $100 billion dividend, that would be a $35 billion tax hit, and the shareholders take a income tax hit of ~30%, which means that $100 billion turns into $45 billion after individual income taxes on the dividend. So they earned $100 billion but that is worth $45 billion in the hands of the investor. Not really a smart move. Might as well buy some overseas companies or re-invest in your overseas supply chain.

If there was no tax hit on the $100 billion overseas, the $100 billion in overseas income does not take the corporate tax hit on repatriation, and then is $70 billion after individual income taxes on the dividend. A much better value to the company and the shareholder.

I understand this argument, but ultimately it's a shareholder argument and not a national economic well-being argument. There's also the argument that, as a company headquartered from the United States, they enjoy all the rights and privileges granted by being backed by the US government in international dealings. Are corporations really willing to argue there's no value to that?

 

[Y2Kev]

Reinvesting in America is not the only use of proceeds for that cash pile. They use it for other things that would not be considered reinvestment but instead capital return, which is a valid and common source of discretionary cash flow for corporates.

The point is that if Apple were Irish, they'd use the cash to repurchase shares or give to shareholders or buy other companies or do some capital spending (but not outsized for what you'd expect). But they're not, so they do it with debt.

Pfizer won't have to anymore.

Edit: Pfizer will continue to pay us taxes on us earnings.

 

[numble]

I understand this argument, but ultimately it's a shareholder argument and not a national economic well-being argument. There's also the argument that, as a company headquartered from the United States, they enjoy all the rights and privileges granted by being backed by the US government in international dealings. Are corporations really willing to argue there's no value to that?

Its not ultimately a shareholder argument. The math doesn't work out to return money to US shareholders, it works out to using the money on overseas projects, which is tied to national economic well-being.

Apple enjoys the same privileges as foreign multinational corporations in international dealings. What value do they get that isn't afforded to foreign multinational companies? Nokia wins IP lawsuits in US courts, the FBI helps Sony with hacking investigations, the US subsidiary of Toyota enjoys all the treaty benefits available to US companies, etc.

 

[Y2Kev]

And Toyota, sony, and Nokia, like Pfizer, pay taxes on us earnings.

 

[David Incorporated Esq.]

Well you both made arguments about why it's good for the companies in question to do it, but I'm asking why it would be good for the parent (or former parent) nations of said companies. Edit: The nations that allowed the companies to exist in the first place...

 

[Y2Kev]

It's not good for the parent nations, but Pfizer's obligations aren't to the government or to the people of the country. Which is again why congress needs to fix this.

 

[numble]

Well you both made arguments about why it's good for the companies in question to do it, but I'm asking why it would be good for the parent (or former parent) nations of said companies.

For most developed nations, "parent nations" do not care because they do not tax foreign earnings. If Sony said they wanted to legally change their residency to Canada, there is no hit on Japanese taxes because Japan does not tax foreign earnings. Sony will continue to only pay Japanese taxes on Japanese income. If Jaguar wanted to legally change residency from UK to Germany, there is no change to the taxes paid in UK and Germany by Jaguar.

 

[David Incorporated Esq.]

For most developed nations, "parent nations" do not care because they do not tax foreign earnings. If Sony said they wanted to legally change their residency to Canada, there is no hit on Japanese taxes because Japan does not tax foreign earnings. Sony will continue to only pay Japanese taxes on Japanese income. If Jaguar wanted to legally change residency from UK to Germany, there is no change to the taxes paid in UK and Germany by Jaguar.

Even when those funds are returned to the parent nation for use as payments to shareholders? And does the US charge the full tax rate on foreign earnings or just the difference in rate between the country of earnings and the US?

 

[numble]

Even when those funds are returned to the parent nation for use as payments to shareholders? And does the US charge the full tax rate on foreign earnings or just the difference in rate between the country of earnings and the US?

They aren't taxed on foreign repatriation, that's the point of companies inverting to redomicile in Canada, UK, Ireland, Netherlands, etc.

The US charges the difference in the rate, but the rate in the country of earnings may be very low due to overseas tax planning (which is a whole other story).

 

[Azulsky]

Tax Law was not ready for globalization.

 

[yongeandcollege]

So what? they are following the law and being more profitable - they are paying taxes, the amount the law specifies right? so what is wrong with this and why are they being greedy?

Their responsibility is to the board and shareholders - that means maximising profits - so this move will mean less taxes and more money for them.

No one is saying it's illegal. I am saying that the government should try and close or at least tighten this type of loophole. The NYT article

http://www.nytimes.com/2015/11/24/opinion/pfizers-big-breakthrough-global-tax-avoidance.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region

raises some good points I think about the benefits that these companies receive from being based in the USA.

 

[Phat Michael]

It's a 32% reduction.

You are right. My bad.

How you can afford all those high end headphones now makes sense .

Nothing to do with no tax, that's to do with a high salary and having no wife and kids.

Then you are an idiot. How is it in your best interest to support international corporations, when you could be benefitting from the tax dollars they would be forced to spend. Or do you now live in Somali to avoid taxes and thus it doesn't matter to you either way?

I see you live in Dubai. So why not side on the behalf of the majority, rather than shareholders? Oh, because you're immoral and think the rich are more worthy than the poor, got it.

Yes that's right I'm pro rich and anti poor. Good thing you can evaluate me so well. I don't like tax. If you enjoy paying it then go ahead?

 

[numble]

No one is saying it's illegal. I am saying that the government should try and close or at least tighten this type of loophole. The NYT article

http://www.nytimes.com/2015/11/24/opinion/pfizers-big-breakthrough-global-tax-avoidance.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region

raises some good points I think about the benefits that these companies receive from being based in the USA.

They remain listed on United States-based stock exchanges, where they raise capital under the protection of American securities’ laws

But foreign companies like Baidu, Alibaba, Blackberry, are listed on United States-based stock exchanges, where they raise capital under the protection of American securities’ laws.

In addition, inverted companies continue to enjoy the protection of patent laws in the United States

Foreign companies have IP protections as well--Nokia sued Apple and won big in lawsuits filed in the US:
http://www.bloomberg.com/news/artic...apple-payments-to-nokia-settle-all-litigation

as well as their connections, official and unofficial, with federal research agencies — all of which are crucial to drug-company profits. Contrary to popular belief, much high-risk, pathbreaking research and development can be traced not to the big drug companies but to taxpayer-funded research at the National Institutes of Health.

I don't think US residency offers this benefit. Just a random example--Bayer, which has always been a German pharmaceutical company, benefits equally from the National Institutes of Health and US taxpayer funded activities:
https://pharma.bayer.com/en/partnering/news/news-page.php/74/local-2015

A new collaboration between Bayer and The University of Texas MD Anderson Cancer Center will go straight to the patient to learn how certain investigational new drugs affect them

 

[David Incorporated Esq.]

Yes that's right I'm pro rich and anti poor. Good thing you can evaluate me so well. I don't like tax. If you enjoy paying it then go ahead?

Nobody likes paying taxes, but we're supposed to be rational adults and recognize the benefits granted to ourselves and society as a whole through said redistribution of wealth.

 

[numble]

Nobody likes paying taxes, but we're supposed to be rational adults and recognize the benefits granted to ourselves and society as a whole through said redistribution of wealth.

Is your argument that the tax systems of foreign developed countries, which usually have lower corporate tax rates and no taxation of foreign income (yet fund universal health care and free/subsidized university education) are irrational compared to a more rational US tax code?

 

[Bronx-Man]

The cyberpunk megacorp future is imminent at this point.

Ooh ooh, I wanna be JC Denton!

 

[David Incorporated Esq.]

Is your argument that the tax systems of foreign developed countries, which usually have lower corporate tax rates and no taxation of foreign income (yet fund universal health care and free/subsidized university education) are irrational compared to a more rational US tax code?

No it was specifically in reference to Phat Michael's banal comment about not liking paying taxes.

 

[Sulik2]

Stepping aside from the tax issue, why on earth are two giant profitable corporations like this being allowed to merge? Anti-trust anyone?

 

[PanicFreak]

And they sure as hell shouldn't be paying lower taxes than me.

Even if they pay at a lower rate, their tax spending vastly out weighs your contribution. Corporate taxes should be much lower (15 to 20 percent) and they need to can the deferred tax regime. Congress will surely get this done....

 

[Kill3r7]

Stepping aside from the tax issue, why on earth are two giant profitable corporations like this being allowed to merge? Anti-trust anyone?

I'm sure the FTC will impose certain orders to "restore" competition if there are any obvious anti-trust issues. They did so as part of the Merck/Schering-Plough deal. Ultimately, the anti-trust aspects of these mergers typically end up being pretty small. The companies might ultimately have to divest themselves of any subsidiary or drug that might run afoul of anti-competitive laws.

 

[numble]

Stepping aside from the tax issue, why on earth are two giant profitable corporations like this being allowed to merge? Anti-trust anyone?

It looks like there may be divestitures, and it looks like they will consider splitting into two separate (Irish) companies after the merger.

 

[Y2Kev]

Allergan and Pfizer have basically no therapeutic overlap. Pfizer's GIP business is like vaccines, immunology, oncology, etc. allergan is dermatology, aesthetics, and ophthalmology. And cns. Little overlap. No anti trust concerns honestly.

 

[neogaffer1]

Sorry I meant income tax. I'm sure there are a lot little charges we have here that could be seen as taxes.

I live in Dubai, UAE. So yeah I take home 100% of my salary and never pay income tax or have to do a tax return or anything.

that's probably a big reason why you see this and don't think it's scummy in any way.

when the average person sets aside a huge chunk of their paycheck for the government, why should a giant coproration with massive cash reserves get to decrease how much they pay?

 

[Phat Michael]

Nobody likes paying taxes, but we're supposed to be rational adults and recognize the benefits granted to ourselves and society as a whole through said redistribution of wealth.

In this instance, they are paying taxes and in compliance with the laws right? So if they find a way to pay less tax, legally, why should they be criticised for it?

The corporate tax laws in the US seem pretty strict. It's a free market so if someone can get a better offer elsewhere then it seems they will? The US needs to be more competitive as it seems some of the biggest companies tend to hold most of their cash reserves off shore right?

 

[David Incorporated Esq.]

In this instance, they are paying taxes and in compliance with the laws right? So if they find a way to pay less tax, legally, why should they be criticised for it?

The corporate tax laws in the US seem pretty strict. It's a free market so if someone can get a better offer elsewhere then it seems they will? The US needs to be more competitive as it seems some of the biggest companies tend to hold most of their cash reserves off shore right?

There's no sense criticizing the companies for behaving this way as it's in their interest, it's more a recognition that some sort of legal action is required to adjust what's in both the company's and the country's best interests.

Saying that the US should just be more competitive in regards to taxes only plays to the interests of the companies at stake, and the US would see little to no benefit from taking that route. The countries that see benefits in doing that are those with small economies seeking attention and profits from large multinationals.

 

[numble]

Saying that the US should just be more competitive in regards to taxes only plays to the interests of the companies at stake, and the US would see little to no benefit from taking that route. The countries that see benefits in doing that are those with small economies seeking attention and profits from large multinationals.

I don't think this is true--it is very common throughout the world to not tax foreign profits. Japan and Germany are not small economies seeking attention and profits from large multinationals.

Right now foreign profits are effectively not taxed anyway as long as US companies spend millions on tax attorneys and tax planning to effectively defer the tax until after repatriation. This is an inefficient use of resources--a Japanese, UK, Canadian, Australian, French, German, etc. company does not need to spend such resources because they automatically are exempt from taxation of foreign profits in their home jurisdiction without wasting resources on tax planning.

 

[David Incorporated Esq.]

I thought he was referring to the corporate rates themselves, not taxing foreign profits in any way. That's a question I'm not well equipped to answer, but can't imagine it's as simple as getting rid of taxes on foreign profits completely.

 

[numble]

I thought he was referring to the corporate rates themselves, not taxing foreign profits in any way. That's a question I'm not well equipped to answer, but can't imagine it's as simple as getting rid of taxes on foreign profits completely.

The inversions don't change anything except remove foreign profits from US taxation. That's why Y2Kev keeps saying Pfizer will keep paying US taxes (on US income). They won't be paying more taxes in Canada, UK, Ireland, etc. unless they are making more sales in those countries after relocating there. The comment about competitiveness regarding inversions is intrinsically linked to the taxation of foreign profits.

Many developed countries like Japan and the UK moved to exempting foreign profits recently.

 

[nelsonroyale]

It isn't even greed. Corporations aren't people. They can't be 'greedy' or anything of the sort. They simply do what's in their best interests like clockwork (though with varying levels of competence). They're not that hard to understand. The people to blame are those that expect them to do anything different in a system that encourages them to do certain things. They won't.

Of course corporations can be greedy...they are socially defined entities. They are actualised by people's belief in them, and regulated within the bounds of legal baselines. Within that, the people who make decisions and the shareholders who vote on them, can decide how the company acts. But you are right, the common ideology is that a corporations reason for existence is to make profit, and if they can get away with it, most of the big ones will do that through any means they can...