A Better Way to Tax the Multinationals

[sinkingfeeling]

http://truth-out.org/opinion/item/16735-a-better-way-to-tax-the-multinationals

We the People put together a system here with schools, universities, scientific research, courts, a stable financial/monetary system, infrastructure like roads, dams, airports, and all the other components of a (used to be) prospering economy. That takes money, and naturally we expect the beneficiaries of all of that investment to give back into the system. But then the beneficiaries of that system figure out ways to get around paying back – and the larger and wealthier they are the more ways they find to give back even less. Jeeze, look at what we learned about Apple!

The fundamental problem is our reliance on the concepts of residence, or where a company is located, and source, or where the company’s assets and production activities are located. These concepts may have worked reasonably well in the 1930s, but they do not hold up when confronting a multinational company with global operations.

… A better approach would be to tax a company’s earnings based on where its products are sold, using what is known as the destination approach. For example, earnings from the production of a smart phone sold in the United States would be subject to U.S. corporate tax, regardless of the company’s residence or where the company reports its production to have occurred.

Using destination to determine tax liability would allow the United States to impose tax on its fair share of multinational earnings while eliminating any incentive for companies to move their activities or themselves to other countries, since the same U.S. tax would still apply regardless of residence or source.

[LonePirate]

1. This needs more study before I can commit to supporting it.

I would like to see several scenarios and examples, particularly of large US based corporations that generate large shares of their revenue from foreign sales and activity. How does this destination plan impact total tax revenue? Will this plan convert the US into a country like the Cayman Islands filled with post office box corporations?

[okaawhatever]

2. I know that's what the EU is looking into. When England had a hearing with Starbucks for not paying

taxes, they talked about their "turnover" or sales volume in that country. They used those numbers to extrapolate what Starbucks was dodging. We definately need to look into multiple options and put them into place.

[HooptieWagon]

3. Sounds reasonable, but...

...if a company is able to sell much cheaper elsewhere, due to little or no corporate taxes, how would the US deal with the ensuing smuggling? I could see that being a problem.