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Comment by notjackma | Hacker News Reader

Exactly. In the case of Apple:

The Irish company licenses intellectual property from an Apple registered company in the Cayman Islands, and of course the Royalties are so high that the Irish company makes no profit.

So all this money accumulates offshore and can't come back to the US unless some taxes are paid, which is why Tim Cook meets with Congress to try and lobby for a tax repatriation holiday.

Which is also why Tim Cook is raising money in the debt markets to pay shareholders dividends - it's cheaper to pay a tiny bit of interest than pay tax. Absurd that such a rich company is doing this.

Ironically, the money is already back in US - the Caymans entity invests the money in the US stock market via Braeburn Capital, a hedge fund based in Nevada and owned by Apple Inc!

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>So all this money accumulates offshore and can't come back to the US unless some taxes are paid, which is why Tim Cook meets with Congress to try and lobby for a tax repatriation holiday.

Ironically a lot of this money would probably be repatriated tomorrow (with taxes fully paid) if Congress ruled out a tax holiday and committed itself to gradually raising rates.

It's just the tantalizing hope of a tax holiday that keeps it abroad.

Or if they just made taxes low enough that it's not profitable to do crazy things like the double-Irish. If we had a permanent lowish tax rate on corporations, they wouldn't save money doing the weird stuff, the money would move to the USA, it would be more liquid (not being tied up in the Cayman islands etc), and the government would get more tax revenue.

How low would the tax rate have to be for that to work?

It's a race to the bottom. Corporate tax in Ireland is a mere 10% which is what you'd pay if you did a "single Irish", but these companies still find it worthwhile to avoid even that much tax through a more complicated scheme. I'll wager the only "low enough" would be zero.

Corporation tax in Ireland is 12.5% (although your analysis is still correct.)

How exactly do you plan on the US staying solvent charging companies a corporate tax rate of 0%? Because that's what their cost is doing the double-irish.

They waste a lot of money setting this all up, changing it all around when policy changes, paying armies of lawyers, not to mention the liquidity problems I mentioned. Sure they "own" the money but it's stuck outside of the USA.

Edit: how do they stay solvent now, when the money is periodically re-imported during tax holidays?

Luckily most of the growth opportunities are outside of the US.

In 2013 US government receipts totalled $2.78tn of which corporation tax constituted $273bn (~9.9%)[1]

I imagine most of the boost in margins to be brought down increasing compensation or numbers employed so most of that gets brought in to tax coffers via personal income taxes.

[1]http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

The US is solvent either way because it is sovereign in its own currency. It cannot physically run out of dollars.

The low corporate tax rates do not hamper the government's ability to spend, but they are inflationary (in a limited sense). The price of investment goods (property, shares, etc.) is driven way, way way way way up because most of the dividends are simply reinvested.

It drives up wealth inequality as well.

Put a small import tax on to pay for the court system & a reasonable amount of police / military. Then fold the rest of the business up.

I think the taxes that predominantly fall on the wealthy are quite low enough. I think perhaps they are a little too low, actually.

the end play is for non-us countries to be shafted off their tax receipts while US gets its cut.

I am very surprised that other countries have left this situation to get this far..

We have mining companies in Australia playing this game essentially depriving the Australian public of their tax receipts. Some day these tax receipts will be enjoyed by US public.

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