Two months ago President Obama announced new rules to stop corporations from moving their offices to other countries to avoid paying taxes. The new regulations do not stop the corporations from moving, but it makes it more difficult for them to get out of paying taxes. This practice of moving overseas steals billions of dollars from our country.
Although it is legal to do so, it is wrong. That is why President Obama's Administration is trying to change the law, making it more difficult for the companies to bring the money back from other countries tax-free. When a company in the U.S. tries to merge with a smaller foreign company to pay lower taxes it's called an inversion.
Then the companies are able to use a loophole called a hopscotch loan which is a way for corporations to have tax-free access to the money they earned in other countries. "The new rules would make it more difficult for U.S firms to invert in the first place by strengthening rules that require the former owners of the U.S. company to own less that 80 percent of the new, foreign-domiciled entity." (The Washington Post) This is a move in the right direction. Many companies have gotten away with paying their fair share through all the loopholes in the federal tax laws. Edward Kleinbard, a law professor and former chief of staff of the congressional Joint Committee on Taxation said the new rules were "very bold and far-reaching and likely to affect many transactions that are motivated by gaining access to offshore cash". (The Washington Post)
This move by President Obama is a step in the right direction, but further regulations in tax laws are needed.
No comments:
Post a Comment