US Tax Laws and Treaties

The worst thing I think America ever did is putting way too many taxes on the poor. One of my reasons is that the poor can’t afford a lot of things with taxes and if the poor buy something they also have to pay taxes, which will make everything more Expensive. My Second reason is that the government should make a rule for taxes based on the person's income. My Third reason is that because of the taxes the poor are getting poorer and the rich are getting richer. Those are my three reasons for why taxes on the poor is the worst thing America did.

Under I.R.C. Section 7701(b), an individual is considered a US resident for tax purposes if they are physically present in the US on at least 1) 31 days during the current year, and 2) 183 days during the three year period that includes the two years immediately before that, counting, all days of current year, 1/3 of days in first year before the current year, and 1/6 of days in the second year before the current year (Substantial Presence Test, 2013). Because Mr. Murray was physically in the US from June through December 2012, 210 days, he is considered a US resident under the substantial presence test for income tax purposes for the year 2012. All his income of $65,000 would be reported on Form 1040 and be taxed as if he was a United States resident.

With the advancements in the globalization of the economy, corporations are finding more ways to avoid the extraordinary tax rates set in place of The United States Of America. With the loss of revenue from large companies dodging taxes the government must make up for the loss by either raising taxes or changing the tax code. A recent company to avoid american taxes is Johnson Controls, a company that “…would not exist as it is today but for American taxpayers, who paid $80 billion in 2008…”(The Editorial Board). This use of American resources to get through tough times, and run to another county during an economic incline is an act that calls for reform in the American tax system. However congress has not passed any legislation to fix the

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.

Throughout years large American industrial companies have been running away from U.S. taxes, but there has been a new change. Companies such as Apple and Google have been affected by a change foreign countries are going through collecting higher taxes than before. It seems as if no longer can these companies get away with paying low taxes. This is happening because the European Commission have passed an order to collect high taxes. One example is Ireland who was ordered to collect fourteen billion dollars from Apple, which brought a surprise to this company. Companies have run out of places to run and pay one percent or less of taxes in foreign places, instead of paying back home.

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.

In the article, “The US Tax System: Who Really Pays” by Stephen Moore, he justifies his belief that there is little to no correlation between economic mobility and equality. Moore delivers his reasoning by contradicting relatively popular statements where some are virtually untrue and others are merely common opposing viewpoints. However, in the end Moore concludes his argument with the belief that raising the taxes on the wealthy would not help the poor’s income mobility, which I support one hundred percent.

Frederic Bastiat, a French intellectual who wrote about economics and government in the first half of the nineteenth century, penned, “When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.” This paper will focus on the legal system that authorizes said plunder in the United States. The tax code of the U.S., as of early 2017, is complicated and extremely lengthy. The majority of Americans consult professionals who study the tax code, in order to pay what the government requires of them, because the average citizen cannot understand the complexities of it. There is a plethora of reasons that the United

With the ever-increasing complexity of the United States tax code, it has become more important than ever for companies to understand and implement possible tax benefits for the company and its employees. One major benefit that applies to both is employer-provided meals. Employer-provided meals have become a major topic due to their double-sided benefits. These are both tax beneficial to employers, as the meals can be deducted by the business as an expense on its federal income tax return, which reduces the business’ tax liability. Concurrently, the benefit of the provided meal is excluded from the taxable gross income of the employee, providing the employee with a tax-free benefit. After fully understanding the laws related to employer-provided meals, a business could begin thinking about implementation of the benefit.

“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,

Ever since the ratification of the 16th amendment to the United States Constitution, Americans have faced the burden of federal income taxes. Income taxes were first proposed as a better way of gathering revenue, as well as an effective measure to manipulate economic spending. However, the current tax code bears very little resemblance to the relatively simple codes that were originally written into law. Today’s tax laws have grown astonishingly complex and unequally distributes the burden of tax liabilities. Our country should confront the issues derived from the increasing complexity of the tax laws and equally distribute the obligations to each taxpayer.

Tax system is a legal system of imposing and collecting taxes from the citizens of the country. As it has been stated by Albert Einstein, the hardest task in the world is to understand the tax system of a country. The United States’ tax system is so complicated that its tax code contains almost 3 million words and 6,000 pages. Moreover, the taxes implied by city and state governments add more complexity to the federal taxation system. In this case, we do not need to understand the complexity of tax code system in order to get acquainted with the significant role of taxes in American society.

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).

The United States is in a recession; it has been facing some of the worse economic times since the Great Depression in the 1930’s. One option to fix the economy is to change the corporate tax rate. To lower it or to raise it, that is the question economists have been speculating. America's high corporate tax rate and worldwide system of taxation discourages U.S. companies from sending their foreign-source revenue home, which makes U.S. companies defenseless to foreign acquisition from the international opponents (Camp). Corporations and United States citizens have been fighting for a tax reform, which would hopefully help the American economy; either by lowering the corporate tax, or by raising the tax.

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