Oxfam is an international confederation of charitable organization that focuses on alleviating global poverty. Recently, the organization stated many corporations are dodging tax by leaving their earnings overseas. Unlike the United States of America, where all taxable income is subject to tax at 34 or 35 when income exceeds 335,000, other countries charge a lot less, some even less than 1%.
The concept of avoiding tax by investing in foreign countries instead of domestic isn’t new. Countless corporations have done it since long ago and have made over trillions in profit due to it. This is simply called “deferral”, which means that they are exempt from offshore profit until these profits come back to US.
The list of world’s best place to avoid tax according to Oxfam are Bermuda, the cayman islands, the Netherlands, Switzerland, Singapore, Ireland, Luxembourg, curacao, hong kong, Cyprus, Bahamas, jersey, barados, Mauritius, and british virgin islands.
It’s obvious why the companies are investing in foreign countries over domestic. Corporate tax are outrageous in the US and it’s killing the economy. Instead of promoting small companies to bloom, the Feds are taxing too much, suppressing potential talents.
But this is also bad for the US as well. Instead of getting the tax money required to pay for infrastructure and pay for services that help our economy grow, the money is going to other country’s budget.
I believe that the US should lower the tax a bit, so the US will get the money they deserve while promoting new businesses. However, I believe that congress may simply end “deferral”, which means that profits of US corporations will be taxed no matter where it is (foreign tax credit will be offered if partial tax is paid overseas to avoid double taxation).
Companies like apple, Microsoft, nike, levi, American express, wellsfargo, amgen and other fortune corporations are holding their wealth offshore and it’s hitting the country harder than it should.
There are more details to this topic, but I’d like you to research your portion and share with the community. Feel free to leave comments below.