The big lie about Corporate Tax Inversions is that they are caused by high U.S. corporate tax rates. Thats not really true. The way I understand things, Inversion lets a corporation avoid the taxes in both countries at the same time. In the U.S., corporate taxes are based on net profits. In much of the rest of the world, taxes are collected at each step where value is added to the product or service. These VAT taxes have lower rates but have very few exemptions, so the result is not usually lower taxes overall. HOWEVER, if a company does its manufacturing and purchasing in the U.S., as well as most of its sales in the U.S., there is no VAT collected on either of those transactions. The tax inversion makes the corporation based in a nation without much corporate income tax, so the taxes are not paid there either.
Posted on: Wed, 13 Aug 2014 20:02:47 +0000
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