Question

Big companies have moved overseas to pay less taxes. Top corporate U.S. rates can reach 35%, while others are much lower, Ireland's rate is 12.5%. There are many stakeholders concerned about this issue; the U.S. government, corporate executives, the U.S. labor force (employees), corporate investors just to list a few.

Is it okay to move overseas to save tax dollars? Research the issue. Select a stakeholder and a position pro or con. Give a detailed defense of your position.

In the subject box, put your stakeholder and if you are for moving or against moving to save tax dollars. (For example: Foreign Country - For Moving)

Answer 1

(Foreign Country – For moving)

1. Yes it is okay to move overseas to save tax dollars. Big companies in the US are moving to Ireland for lower tax rates i.e. 12.5% as compare to the US rates i.e. 35%. The companies are moving through the mode of taking over the companies that operating the Ireland. The big advantage is tax inversions besides lower tax rate. By acquiring the company in Ireland and using its cash flows for business transactions and also earning from the acquired company from the Ireland are also taxed at low rate.

For example if let say A co. is operating in the US and it is a big company in the US. The company has also foreign earning. In this case the A Co’s foreign income are taxed at high corporate tax. And if the Company move to the Ireland by acquiring another company in the Ireland of same business, then the company’s foreign earning are taxed at lower tax rate @ 12.5%. Tax saving amount will also go up.

Most countries have much lower tax rate and also some exemption for foreign earnings and in the US the disadvantage is of High tax rate for domestic as well as foreign earnings. So most of the big companies in the US are moving to overseas for high tax reason.

2. Stakeholder – U.S. Government

To best of my knowledge the most disadvantage part to the U.S. government is loss of corporate tax revenue. In the long term the companies are reducing the investment in the U.S. due to this high tax rate. The big corporate of the U.S. that generates more tax revenues are leaving that is also the big disadvantage for the U.S government.