[M]uch of the untaxed [corporate] income is actually earned in the United States before elaborate accounting schemes siphon it overseas. The racket is simplest for tech and pharmaceutical companies, whose value is tied to intellectual property. According to David Cay Johnston, author of Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich – and Cheat Everybody Else, Pfizer provides a prime example. When the company was developing Viagra, it transferred the economic rights to its intellectual property abroad, ultimately to a shell company in Liechtenstein – an infamous European tax haven. On each sale of the drug here, the European subsidiary charged the U.S. parent company a steep royalty – payment of which moved the profit from high-tax America to low- to zero-tax Liechtenstein. Adding insult to injury, this self-dealing creates a phantom business expense in the United States. They get a tax deduction in America while they pile up the money in another country, tax-free, says Johnston. [...]
Posted on: Mon, 01 Sep 2014 01:00:27 +0000
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