RESEARCH PROPOSAL
ASSESSING THE UNITED STATES RESPONSE TO PREVENT CORPORATIONS FROM FLEEING THE U.S. AND INCORPORATING ABROAD
TABLE OF CONTENTS
I. Abstract ………………………………………………………………….. 3
II. Introduction to the Problem ………………………………………………4-8
a. Economic Background …………………………………………... 4-5
b. Defining Corporate Inversion …………………………………… 5-6
c. Historical Analysis and Political Response ……………………... 6-7
d. Research Question ………………………………………………. 7
e. Hypothesis ………………………………………………………. 8
f. Significance of Study …………………………………………… 8
III. Literature Review ……………………………………………………….. 8-10
IV. Methodology ……………………………………………………………. 10-12
a. Research Design ………………………………………………… 10-11
b. Data Collection …………………………………………………. 11-12
c. Data Analysis …………………………………………………… 12
V. Anticipated Findings/Impact ……………………………………………. 13
VI. References ………………………………………………………………. 14
VII. Appendix …………………………………………………………………15
Abstract
Companies deserting the United States and fleeing to foreign tax havens to escape United States taxation, a process known as corporate inversion strategy, is occurring with great frequency in the modern economy. The Burger King and Tim Hortons merger and planned reincorporation in Canada culminated the list of major American countries with pending mergers 2014. With one of the highest corporate tax rates around the globe and the taxation of profits earned from foreign subsidiaries but brought back into the home country, companies are seeking ways to insulate their profits
Contents 1. Introduction……………………………………………………………….…..…3 1.1 Report Overview………………………………………………………….…...…3 1.2 Organisation Overview……………………………………………….…………3 2. External Environmental Analysis…………………………………….……...…4 2.1 Analysis of Macro Environment………………………………………..………4-5 2.2 Analysis of Industry Environment………………………………………..……5-6 2.2.1 Threat of New Entrants……………………………………………….….…6 2.2.2 The
When U.S business are thinking about going abroad, they need to be aware of the other country’s laws and regulations. “All businesses must, of course, follow the laws of the countries in which they are physically present and operating. Businesses may also be required, even in their foreign operations, to continue to follow certain laws of their home country. Also, businesses operating across national borders will also be subject to international law (Tony McAdams, 2014)”.
In recent years, more than twenty major American companies have left the United States and moved overseas to take advantage of lower tax rates, taking with them jobs and investments (Allen, D). The recent surge of interest in United States corporate inversions has triggered calls for Congress to put an end to the practice. A corporate inversion is when an American company merges with a foreign business and moves the combined business’s headquarters to the foreign country. Inversions are a problem because they are a symptom of a broken tax system that is hurting the United States economy. Furthermore, with the strict laws concerning inversions, some companies opt to direct profits to their foreign subsidiaries to take advantage of lower
I chose to enroll in PC to earn my AAS-T in Administrative Office Systems with an emphasis in administrative assistance in 2015. I am currently four classes away from completing my degree and I’m ready to take the next step by working towards a BAS in Applied Management. I feel it will give me a much broader understanding of the theories and practices of business and management and I know it will help me when directing my own family’s home rental business. These, however, are not my only reasons for wanting to continue my education. I am a mother of a 19-month-old son and having him has changed my life in many ways. It’s become of even greater importance for me to achieve a higher education and to set a good example for my son and any future
Tax inversion can be commonly found to be used in America. Tax inversion is when a corporation or business relocates their operation overseas to reduce how much taxes they have to pay. When companies are picking a country to relocate to they are mostly looking for one that has lower tax rates and little to no corporate requirements. I can see in way why corporations take this route when it comes to high tax rates, but looking at it from a bigger picture I believe that corporation should not be allowed to relocate to avoid tax rates. Taxes are vital to the economy as they play a big role in our life every day. Taxes pay for public schools, police department, roadwork, public transportation, and much more. I have personally used many of the services
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.
This article begins by explaining that recently many American corporations have moved their headquarters from the U.S. to forging lands in attempts to cut down on taxes. It explains that this is called inversion, and while a few corporations doing so is simply irritating, mass inversion can be detrimental to our society. Another form of inversion is in the form of “never here” which are private companies, which began as U.S. companies that go private and move out of the country only to move to another country to become public. This enables them to duck out of many U.S. taxes without being accused of deserting the U.S.
Tyler Rauert simplifies the complex world of international commerce and investment for growing businesses in the US and abroad. Building on more than a decade of experience in the US foreign policy community, Tyler focuses his practice on foreign investment, cross-border business transactions, entity formation and funding, corporate governance, and international dispute resolution. He also advises U.S. and international clients on U.S. federal laws and regulations governing international business such as trade and investment agreements, the Foreign Corrupt Practices Act, the International Traffic in Arms Regulations, the Export Administration Regulations, and the Foreign Asset Controls Regulations. Tyler is also actively building Colorado's
However, the introduction of such a law becomes increasingly difficult when the companies being questioned are some of the largest and wealthiest in the world. In order to truly understand the stature of these companies, one would need to look into some of the statistics regarding them. Remarkably, according to Al Jazeera America “the largest 500 U.S. companies would owe an estimated $620 billion in U.S. taxes” if they had to declare all their overseas stockpiles, of around $2.1 trillion (“Al Jazeera America”). In addition, it found that “three-quarters of the 500 biggest companies utilize tax havens”. The top three offenders included Apple, General Electric and Microsoft. In many cases according to the report, the money is not being utilized to improve foreign economies. By this they mean to say that, U.S. businesses were not using their overseas profit to build factories and employ individuals. Instead, the overseas profit was a result of accounting tricks purposely implemented to benefit the business alone. To put all of this in perspective, the United States is losing billions of dollars to foreign economies. These taxes are being introduced into countries such as Ireland and Luxembourg. In other words the money that should be invested in the United States of America on public services, is being
This claim says that it is acceptable for companies to move their business to other countries where the tax rate isn’t as high so they can avoid paying more taxes than they would here in the US. It is legal for US businesses and organizations to move their practice to another country where the tax rate is lower. This is called “corporate inversion.” In the United States, there are many rules and regulations when it comes to paying taxes as a business. There are also brackets that businesses are broken down into depending on their income and revenue. The corporate tax rate in the US is usually around 25% and it varies from around fifteen percent to thirty five percent.
The world has seen a huge rise in the number of Transnational Corporations. Since the 1970s the number of TNCs has risen from 7,000 to over 60,000. To begin with, around 95%
As an illustration, Hillary Clinton presidential campaign is proposing a new “exit tax” focus on business reversions, as a strategy that allows accessibly between U.S. Corporations and international investors to merge their economic standing overseas to lower their taxes. The new tax would be part of a broader effort to target what experts say is roughly $2
The ailments that our textbook mentions, like heart disease, diabetes, and HIV/Aids (p. 425), are more common among non-white minority populations than they are among whites. This rings true at least a little to me—one of our family friends, a very friendly mom with about 50% Native American heritage, has diabetes. (I've also known a white boy that has diabetes, so I guess that evens out my experience... unless I just interact more with white people.) Being a racial minority, according to our textbook, means one is at higher risk of contracting or being affected by certain illnesses. I know from biology class that people of African descent are at greater risk of developing sickle cell anemia. This may be related to social factors (as a sociologist
To identify the objective to enter into United State America has 74 million of population and the most of them have strong purchasing power that can increase the company profit quickly. The political and economy of USA is very stable it will attract foreign corporate expand the business into country. There are many competitors