Panama And Paradise Papers

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

However, the companies only have to pay the U.S. tax for foreign revenues once they bring the profits back to the United States. As a result of these current tax laws, U.S. companies that seek to avoid high corporate tax rates hold their foreign earned profits overseas. “It just makes no sense to pay a substantial tax on it,” said Joseph Kennedy, a senior fellow at the Information Technology and Innovation Foundation (Rubin, R.). It is far too easy for an IT corporation to create a patent in a foreign country and direct revenue to a corporation within that country, thus avoiding the much higher U.S. tax rates. According to Joint Committee on Taxation estimates, the lost revenue is increasing over time as corporations find even more creative ways to make their U.S. profits look like offshore income (Richards, K., & Craig, J.). As result, multinational American corporations have as much as $2 trillion held in overseas subsidiaries and if brought into the United States with the current tax laws, the federal government could benefit by nearly $50 billion per year.

The main objective of many companies is to minimize their tax obligations. Jeffers (2014) discussed the reason of why companies adopt tax inversion strategies. The researcher indicated that the income maximization is a major reason of companies attempting to reduce their tax liability (pp. 100-101). Tax inversion strategies provide companies an advantage to lower income tax rate. Today, U.S. corporations renounce its U.S. citizenship and move to low-tax countries. Companies that reincorporate oversees are not obligated to pay U.S. taxes on earning income (p. 99). Many countries implement tax competition strategies to attract and retain businesses. Well-known companies, such as Exxon Mobil, Hewlett Packard, Tyco, General Electric, PepsiCo, etc. take benefits of tax shelter opportunities overseas (p. 102). Other benefits of the jurisdiction abroad are flexible banking laws and simplified litigation processes.

This article begins by explaining that recently many American corporations have moved their headquarters from the U.S. to forging lands in attempts to cut down on taxes. It explains that this is called inversion, and while a few corporations doing so is simply irritating, mass inversion can be detrimental to our society. Another form of inversion is in the form of “never here” which are private companies, which began as U.S. companies that go private and move out of the country only to move to another country to become public. This enables them to duck out of many U.S. taxes without being accused of deserting the U.S.

“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,

However, the introduction of such a law becomes increasingly difficult when the companies being questioned are some of the largest and wealthiest in the world. In order to truly understand the stature of these companies, one would need to look into some of the statistics regarding them. Remarkably, according to Al Jazeera America “the largest 500 U.S. companies would owe an estimated $620 billion in U.S. taxes” if they had to declare all their overseas stockpiles, of around $2.1 trillion (“Al Jazeera America”). In addition, it found that “three-quarters of the 500 biggest companies utilize tax havens”. The top three offenders included Apple, General Electric and Microsoft. In many cases according to the report, the money is not being utilized to improve foreign economies. By this they mean to say that, U.S. businesses were not using their overseas profit to build factories and employ individuals. Instead, the overseas profit was a result of accounting tricks purposely implemented to benefit the business alone. To put all of this in perspective, the United States is losing billions of dollars to foreign economies. These taxes are being introduced into countries such as Ireland and Luxembourg. In other words the money that should be invested in the United States of America on public services, is being

Americans may ponder the thought of struggling economy barely gaining momentum while corporations have witnessed some of the largest quarterly profits ever recorded. The driving force behind the extreme profits gained by many corporations is simply put as tax inversion. Tax inversion is nothing more than an American firm combining with a foreign firm in a country with beneficial and lucrative tax laws (Financial Times, 2014). The American headquarters will now be moved to the new foreign firm where they will enjoy the lower taxes and evade the taxation of the United States government (Financial Times, 2014). More and more American firms have been taking advantage of inversion while still being able to enjoy sales in the American market.

“Panama Papers: The Real Scandal Is What’s Legal” by Brooke Harrington was written on April 6th, 2016 and published in ‘The Atlantic’. In this article, Harrington stresses the idea that tax avoidance and offshore finances are entangled with the acts of many governments seeing that it is what stabilizes the economic growth of a country. The author discusses the link between the Panamanian wealth management firm Mossack Fonesca, to a numerous amount of financial crimes. The “Panama Papers” are documents that consist of firms who are allegedly involved in fraud, money laundering, and theft. No country would even think to create strict laws towards ending tax evasion because it would hurt several economies and firms like Mossack Fonesca whose

The recent introduction of the hybrid entities has shielded the foreign firms from paying their appropriate taxes through the shielding of the taxable income and through using the foreign tax amounts on the other incomes (Messina, 2015). In this regard, only minimal taxes are remitted from the revenue generated by the local firms. Besides, people tend to evade tax charged on dividends and interests by not giving honest reports pertaining to the revenue generated abroad. Furthermore, individuals evade the taxes through transferring their funds to foreign accounts. Fortunately, the IRS can address the issue of tax evasion by changing the existing tax laws to remove the deductions and other restrictions, for instance, the foreign tax credits. Besides, it is vital to impose restrictions to curb tax evasion at a personal level through the desired policies of better information reporting and tougher penalties for the

The Panama Papers are 11.5 million financial and legal records that exposes a system that allows crime, corruption, and wrongdoing covered up by secretive offshore companies. Police in Panama arrested the founders of the law firm at the center of the Panama Papers scandal on money pressing charges after authorities raided the firm’s headquarters as part of the investigations into Brazil’s largest bribery scandal. In a country where top-drawer lawyers move freely between government posts and law firms selling cloaked shell companies, the challenge of improving Panama's offshore industry not to include the spotlight cast by the Panama Papers shows a problem faced by tax havens around the globe. These leaked documents kept personal financial information

people are arguing whether to revise the tax code for corporations who are avoiding taxes in the US, and there are both advantages and disadvantages about this topic.

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.

The actions of multinational corporations (MNCs), which derive from their morally dubious goals, may be completely legitimate within a capitalist society. One of these actions that will be examined in this essay is the use of tax havens, as a way of avoiding higher tax liability. This paper will utilise the case study of Apple’s tax avoidance, in examining the legitimation of a company’s goal of profit maximisation, a goal that is against the moral/social consensus

FACT: Excessive tax burdens in welfare states such as France encourage tax evasion. This leads to capital flight to places such as Hong Kong, Switzerland, the United States, and the Cayman Islands. If French politicians do not like capital flight, they should lower France's oppressive tax rates. Moreover, tax havens play a key role in protecting people victimized by crime, corruption, and ethnic or religious persecution precisely by shielding them from venal governments .

In multi-national corporations (MNCs), taxation has caused heated debates and generated strong criticism from civil society in recent years. Taxation is of great importance to the development of every nation. It is a major source of revenue for the development of nations worldwide. In general, the taxation of companies and business activities is a difficult task for states.