Now this might be misleading. My roommate is a corporate/tax law student and he was dumbfounded by this. He pointed out that the effective tax rate might be quite different.
In any case it's not what you expect.
>https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...
For OECD countries only:
http://ctj.org/ctjreports/2013/04/the_us_continues_to_be_one...
For example, Apple pays an effective tax-rate around 15% (US 'official' corporate tax is at 35%).
Apart from tax-payers loosing out on revenue it also distorts competition, since smaller firms cannot lobby and evade taxes to the extent larger firms can, leading to lower ROE and thus less investment.
The tech industry, including Apple, largely does not benefit from targeted tax breaks. They lay low taxes because they deal in IP and have international operations, which allows them to easily shift taxes to lower-tax jurisdictions. It's easy to look at Wal-Mart's supply chain, which involves widgets, and see where costs were incurred and profits made. Much less so with Apple.
And those tax rules tech companies take advantage of are not loopholes or tax breaks. They're reasonable and sometimes intrinsically necessary tax rules that can be arbitraged in an international system (often with the explicit aid of legislatures in countries like Ireland).
"The regulations, however, had significant unintended consequences and opened the door to a host of tax avoidance schemes. Under Subpart F, passive income paid from one separate legal entity to another separate legal entity – even if they were both within the same corporate structure – was immediately taxable. However, with the implementation of the check-the-box regulations a U.S. MNC could set up a CFC subsidiary in a tax haven and direct it to receive passive income such as interest, dividend, or royalty payments from a lower tiered related CFC without incurring Subpart F income. [...] On March 26, 1998, Treasury and IRS then proposed regulations to close the loophole opened by the check-the-box rule."
Page 12 http://www.hsgac.senate.gov/download/?id=7B9717AF-592F-48BE-...
One trick is to park it abroad and lobby for tax-amnesty (a horrible name btw):
- http://www.bloomberg.com/news/articles/2016-01-03/jokowi-see...
- http://archive.fortune.com/2011/02/16/news/companies/repatri...
Another one is to use the money parked abroad (i.e. not yet taxed) to buy expensive things and then write down most of the asset a year or two later.
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"[they] are not loopholes or tax breaks. They're reasonable and sometimes
intrinsically necessary tax rules that can be arbitraged in an
international system"
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Also, to be clear, I love capitalism and happen to think that 35% corporate tax is a bit too high (~25 feels reasonable).
What I don't like is larger firms having lower rates (unfair) and many countries loosing out on tax revenue with a few 'tax havens' getting loads of tax-revenue while producing nothing of value -- Luxembourg, Lichtenstein, British Virgin Islands, Ireland (to some extent) etc.
There is some idea that people and companies have a moral duty not to organise their affairs in a tax efficient way. But the laws they lobby for are just what create the distortions.
Also, many countries has a law that basically says that anything a company does to reduce their amount of taxes without serving a business purpose is illegal. In other words, if don't have a very good reason for why your taxes are paid in the Bahamas when 99% of your sales is outside the Bahamas, it won't fly in court.
I think the responsibility is with governments (though I do think many companies act immorally) to provide a fair, simple tax-system and to prohibit and persecute tax evasion/avoidance/etc.
There could be practical reasons against such a scheme, Maybe it would be easier to game than the current system. But the point is, fairness consists in distributing the tax burden among people -- abstractions like "corporation" are neither here nor there.
The USA is a fair way down.