Clam Vs Utilitarianism

We examine the effects of transfer pricing on shareholders of multinational corporations and the United States government through a case study on Apple. Apple was able to successfully dodge billions of taxes in the U.S. through the use of aggressive transfer pricing with their Irish subsidiaries. We found that Apple was never fined by the IRS because they were exploiting a loophole in the arm’s length principle. While shareholders stand to profit from aggressive transfer pricing practices, they must be aware of the risk that aggressive transfer pricing imposes and be aware of companies’ motivations and morals for engaging in transfer pricing.

But as we noted when we fact checked another of Obama's campaign statements— one from the 2010 midterm elections claiming then-House Republican leader John Boehner supported these deductions — there are no provisions in the tax code that specifically reward companies for building factories overseas or outsourcing jobs. There are, however, provisions that allow companies to avoid paying U.S. taxes on income generated by their foreign subsidiaries, at least until they bring those profits back to the United States. Both the president and legislator say these deferrals can encourage U.S.-based multinational companies to keep their foreign profits abroad and reinvest them in infrastructure overseas.”

With bringing your factories to foreign countries you get cheaper labor land and can avoid many taxes.

Companies in the US are finding clever deceiving ways to get what they want. Many companies like Google are investing offshore to avoid American taxes. Others like the company Monsanto uses

In recent years, more than twenty major American companies have left the United States and moved overseas to take advantage of lower tax rates, taking with them jobs and investments (Allen, D). The recent surge of interest in United States corporate inversions has triggered calls for Congress to put an end to the practice. A corporate inversion is when an American company merges with a foreign business and moves the combined business’s headquarters to the foreign country. Inversions are a problem because they are a symptom of a broken tax system that is hurting the United States economy. Furthermore, with the strict laws concerning inversions, some companies opt to direct profits to their foreign subsidiaries to take advantage of lower

are bearing the sting of taxes and a stagnant income. Since Americans cannot escape paying Uncle Sam, the thought of corporations incorporating overseas is a bitter pill to swallow. For example, last year, Walgreens has to abandon its plans to move its headquarters to Switzerland amid fears of backlash from American citizens. However, Walgreens was especially susceptible to the public sentiment as it is a retail company. While the American public has demonstrated outrage over larger companies moving overseas, they have remained quiet when smaller businesses or non-retail businesses have pursued inversions.

“The United States has the highest corporate tax rate of the 34 developed, free-market nations that make up the Organization for Economic Cooperation and Development (OECD). The marginal corporate tax rate in the United States is 35% at the federal level… according to the 2013 OECD Tax Database. The global average is much lower, at 25%” (Fontinelle, 2014). Even though there are ways for businesses to decrease or even avoid these payments, this high figure deters foreign investors from considering the United States for business and sends them looking in more favorable countries like Canada or Ireland. Adding to pushing away potential foreign investors, U.S. firms flee to those tax favorable places to avoid it. “When these companies move their headquarters or create foreign subsidiaries, jobs and profits move overseas” (Fontinelle,

Isn't it a shame that our own American companies would rather take jobs from us just to pay a little less tax in another country?  I could never turn my back on our American people for that reason.  I know that the money looks better when you move the company over seas and the wages are so much less and the taxes not as much, but this is our country and our people, we should be supporting our own, and not, other countries.  We are still the largest economic country, but China is not far behind and as we move more companies over seas, we are allowing them to catch up and become the big decision maker of the world.  Not too sure how well that will work out for everyone.

Tax inversion can be commonly found to be used in America. Tax inversion is when a corporation or business relocates their operation overseas to reduce how much taxes they have to pay. When companies are picking a country to relocate to they are mostly looking for one that has lower tax rates and little to no corporate requirements. I can see in way why corporations take this route when it comes to high tax rates, but looking at it from a bigger picture I believe that corporation should not be allowed to relocate to avoid tax rates. Taxes are vital to the economy as they play a big role in our life every day. Taxes pay for public schools, police department, roadwork, public transportation, and much more. I have personally used many of the services

The people of those countries will be mad if that company moves out. Since companies have gone global, their officers are also from different parts of the world. Their headquarters are in one place and factories in another. It starts to get hard to tell where the company belongs.

883(a)(5) provides for a special rule that does not take into account any failure of a foreign country to grant an exemption to a corporation organized in the United States if the corporation is subject to tax by the foreign country on a residence basis pursuant to provisions with the foreign law. Simply put, if a foreign country neglected to tax a United States corporation who qualifies to be a resident of the country, it is not factored into the tax treatment from the United States.

Companies that choose us because we can help them with their global expansion will still come here. Companies wanting us for tax reasons may have to think otherwise.

Intercompany transactions could occur across national borders, it would lead MNC companies to get more exposure to the differences of the tax regulations between countries. This might lead MNC companies to set up their objective to minimize their taxes through the use of discretionary transfer prices. These issues are attracted the attention of the member of the U.S. senate, foreign governments and international organization such as the OECD, G20 and European Union (EU).

A tax haven is a country that offers foreign corporations and individuals relatively low corporate and income tax rates, with a politically and economically stable environment. Some tax havens are Switzerland, Hong Kong, Bermuda, Ireland, and the Cayman Islands. Although the businesses have moved across seas, the United States forces them to pay the corporate tax. Fortunately for the businesses, it they keep their income and money across seas they do not have to the pay the American corporate tax, Unfortunately this is ghastly for the United States Government businesses keep their products and profits over seas.

A secondary reason and potentially more important one for a nation is the current economic recession we are seeing. Nations that are fully engaged in Globalization have been lowering the requirements and laws for foreign entities. In doing so it makes it easier for a foreign nation to establish a presence in that company. Most of the time the company will hire local workers to fulfill their needs at that location. The government has now given this business a break to establish itself locally and is collecting minimal monies on taxes. The local people are employed and money is