America has long been recognized for its focus on innovation and invention. Some of the world’s biggest companies were started in the U.S. and entrepreneurs find a great amount of support and opportunity. Despite this history, domestic companies also face challenges that are outside of their control and one of these challenges is the corporate tax code.
Recently, that code has come under heavy criticism as more attention is brought to inverting companies who often buy companies in other countries and then move their headquarters there. Currently, the tax that companies headquartered in the U.S. must pay is 35 percent – the highest rate in the world. Critics of the rate say that having to pay such a high tax prevents companies from investing more money into their American operations. One company will probably pay $150 million less in taxes each year now that it has purchased a company based in Ireland, where the corporate tax rate is just 12.5 percent.
Many companies, who do business in other countries, are choosing to keep that money outside the U.S. This is because if they bring that money home, they could pay a tax rate that is doubled. It is estimated that the amount of money kept outside the U.S. by companies amounts to $2.1 trillion. Such moves have generated criticism from The New York Times, which states that such companies are unpatriotic and tax dodgers. However, the paper also admits that part of the problem is the tax code.
Tax codes can be difficult for companies of any size to navigate. When businesses or corporations have questions about what they need to report or how much they may need to pay, they may find it helpful to meet with an experienced attorney.
Source: Breitbart, “What The New York Times gets wrong on tax inversions,” Alfredo Ortiz, Feb. 13, 2016