The combined federal and state corporate income tax in the U.S. is
nearly 40 percent. And, the U.S. imposes this nearly 40 percent tax levy
on the global earnings of U.S. based companies. Most Organization for
Economic Co-operation and Development (OECD) countries only tax the
profits earned in the home country — a Canadian based company only pays
taxes on income earned in Canada, the Canadian government does not tax
income earned elsewhere in the world.
The exceptionally high tax rate on global profits creates a burdensome competitive disadvantage for U.S. companies. Instead of facing a tax burden that can be three times as high as some of their competitors (companies located in Ireland), some companies are restructuring their operations via a corporate inversion.
A corporate inversion is a type of acquisition. Recent examples include the Burger King and Tim Horton’s deal, or the Pfizer and Allergan deal that is pending.
In the Burger King-Tim Horton deal, Burger King purchased Tim Horton’s and located the combined company in Canada where the corporate tax rate is 26.5 percent.
Burger King used to pay U.S. corporate income taxes on profits earned in Canada, Ireland, Japan, or anywhere else in the world. Now, post-merger, Burger King still pays a marginal tax rate of nearly 40 percent on its profits earned in the U.S. However, profits that are earned outside of the U.S. are not subject to U.S. taxes — a much more equitable and sensible tax basis.
http://spectator.org/articles/65026/through-corporate-tax-looking-glass
The exceptionally high tax rate on global profits creates a burdensome competitive disadvantage for U.S. companies. Instead of facing a tax burden that can be three times as high as some of their competitors (companies located in Ireland), some companies are restructuring their operations via a corporate inversion.
A corporate inversion is a type of acquisition. Recent examples include the Burger King and Tim Horton’s deal, or the Pfizer and Allergan deal that is pending.
In the Burger King-Tim Horton deal, Burger King purchased Tim Horton’s and located the combined company in Canada where the corporate tax rate is 26.5 percent.
Burger King used to pay U.S. corporate income taxes on profits earned in Canada, Ireland, Japan, or anywhere else in the world. Now, post-merger, Burger King still pays a marginal tax rate of nearly 40 percent on its profits earned in the U.S. However, profits that are earned outside of the U.S. are not subject to U.S. taxes — a much more equitable and sensible tax basis.
http://spectator.org/articles/65026/through-corporate-tax-looking-glass
No comments:
Post a Comment