Credit: Adam McCauley
I must take exception to the statement in “Tax Turnaround Time?” (Fall 2014) that “both sides agree on the need for a reduced tax rate and the move to a territorial system. … ” That is simply not true.
A territorial system would allow multinational corporations to avoid taxation on any profits they claimed they earned offshore and would put domestic companies against whom they compete at a great disadvantage. While it is true that our nominal corporate tax rate is high, the effective U.S. tax rate on multinational corporations is on a par with those of other developed countries.
No one disputes that our tax system is riddled with loopholes or subsidies which should be eliminated.
We need to adopt a system of apportioning the multinationals’ income, rather than exempting them from taxation of income they claim they earned offshore. For almost one hundred years, the states have adopted either a three-factor
apportionment of taxable income based on the amount of property, personnel and sales within their boundaries or simply on the amount of sales in their state, and the U.S. Supreme Court has ruled that that is at least as accurate as using transfer pricing to determine where profits are earned.
Territorial taxation is merely a very clever way of disguising perhaps the largest theft from taxpayers in our history. Is it any wonder that such a sophisticated campaign is so well-funded and -led?