Why Corporations Are Avoiding Paying Millions On The Government Of The United States And Other Countries

975 WordsApr 28, 20164 Pages
Corporations are avoiding paying taxes to the government of the United States and other countries. This tax avoidance costs the governments of various countries millions, if not billions of dollars in tax revenue every year. The government needs to stop the manipulation of tax loopholes by US corporations who are avoiding paying millions of dollars in taxes each year and eliminate the tax havens and loopholes once and for all. Tax loopholes need to be eliminated because multinational corporations avoid paying billions of dollars in taxes to the United States. They use various malicious strategies using subsidiaries in other countries to avoid paying the statutory 35% corporate tax rate. OXFAM America, an organization that fights poverty, hunger, and injustice around the world, lists some of these strategies in a media briefing they released mid-April. These strategies include: artificially shifting ownership of assets, inversion, and “earnings stripping.” The first strategy is where companies move the ownership of assets to subsidiaries. These subsidiaries only exist on paper in tax havens like the Cayman Islands, according to the OXFAM report. The report also states that assets like patents and other intellectual property are transferred to the subsidiary, and the US company pays royalties for use of the intellectual property, decreasing the profits of the US company, and increasing the profits of the Cayman Islands subsidiary. The company is then paying less of their

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