Some lawmakers say that taxes should be lowered on corporate profits to encourage companies to re-invest and stay in the United States. Others believe that the United States should increase restrictions on the ability of companies to move profits off shore.
You can read more about what inversions are at this Investopedia site.
This article from Bloomberg Business News outlines the Burger King deal and gives a pretty interesting overview of the struggle in Washington to deal with inversions.
Another issue closely related to inversions is the issue of "earnings stripping." This involves declaring dividends in a foreigns nation in order to reduce the taxable income of US corporations.
Think: Most countries tax businesses based on the earnings made within their own boarders whereas the United States taxes corporations based on the earnings from their entire worldwide operations. Should the United States change it's tax policy to emulate that of the rest of the international community?
The US has the highest tax rate of any industrialized nation (35%). Companies currently are holding over two trillion dollars in overseas accounts because they don't want to bring the money back and pay taxes on it. Should the US lower its tax rate to encourage investment here at home?
Are US companies being unpatriotic for wanting to avoid paying taxes or are they just acting in their own (and their shareholders) best interests?
Assignment: Write a one page Google Docs paper titled Tax Inversion. Format your paper in 12 point Times New Roman, double-spaced text. Answer the questions above. Share your paper by the end of class. Your paper will be graded based on the following:
- Grammar usage and punctuation 0-3 points
- Formatting 0-3 points
- Quality and completeness of your answer 0-4 points
Total available points 10
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