Paradise papers

[Aimless]

Looking forward to seeing the fallout from this:

https://www.icij.org/investigations/paradise-papers/

[Hazir]

Looking forward to seeing the fallout from this:

https://www.icij.org/investigations/paradise-papers/

I found the investment of mrs Windsor in what is essentially a loan shark mildly amusing.

[Flixy]

US secretary of trade dealing with Venezuelan state oil company and Russia is a nice touch, too.

[Aimless]

He has recused himself from all matters involving shipping

[Ominous Gamer]

If anyone had any sense, this revelation would shut down the argument for trickle down and corporate tax cuts. These companies are already sitting on more cash than ever before. They can already afford to create new jobs and unemployment is already rather low. Any tax cuts are simply going to be hoarded with the rest of their money.

[wiggin]

OG, while I'm not convinced that tax cuts are the solution, you do realize that this actually is supportive of that thesis. Because companies can't repatriate money without paying high marginal rates, they stash it offshore instead if investing it in the US. There's plenty of reason to argue in favor of having a similar overall tax burden on companies but to reduce marginal rates by eliminating deductions (on eg debt) and switching to a territorial system.

[Ominous Gamer]

Because companies can't repatriate money without paying high marginal rates, they stash it offshore instead if investing it in the US.

Considering the popularity of this tax haven "high" here literally means anything above zero.

[Hazir]

OG, while I'm not convinced that tax cuts are the solution, you do realize that this actually is supportive of that thesis. Because companies can't repatriate money without paying high marginal rates, they stash it offshore instead if investing it in the US. There's plenty of reason to argue in favor of having a similar overall tax burden on companies but to reduce marginal rates by eliminating deductions (on eg debt) and switching to a territorial system.

With territorial system you mean taxing where the profit is actually made?

[wiggin]

Considering the popularity of this tax haven "high" here literally means anything above zero.

Not really. Assets in offshore accounts often are quite low yielding; but if you're hit with a 35% tax on anything you repatriate, you really need to be sure it's a good investment you're making domestically. If the rate is, say, 20%, the bar for repatriating money to invest is much lower - and the increased yield from the domestic investment may pay off.

Widespread use of offshore domiciles is not evidence that companies refuse to invest; it's instead evidence that they refuse to repatriate money at high marginal rates. A much better critique would focus on the way that taxes are avoided by housing IP in low tax jurisdictions, even though the IP might have been developed in the US. The rules generally allow this at the moment, but going after these rules - rather than quibbling about marginal rates - would be far more effective at addressing a real issue.

With territorial system you mean taxing where the profit is actually made?

Yes, as happens in most of the world. I recognize that determining where profit is made can be quite challenging in a multinational, especially one that sells tech services rather than physical products, but if rules could be fairly harmonized, I think it would greatly benefit the global tax system.