The fact that companies are able to create loopholes via lobbying is the problem. When you accept corrupt government as an unchangeable fact of nature, you've already conceded defeat.
or... you might become a realist, and maybe try to come up with solutions applicable in real world, on real people and real situations.
I'm not claiming I know what the solutions are. But I am damn sure theoretical solutions for theoretical situations tend to fail spectacularly in reality, no matter what topic they are about.
100% agree, and this has been very frustrating for me over the last decade or so. Elected reps (in the US, at least) are barely going through the motions of obscuring the quid pro quo any more, and it seems like nobody really cares.
How can this loophole get fixed? My (admittedly minimal) understanding is that these companies don't have to pay taxes on the money until they repatriate it. From the perspective of countries like the US or UK, Apple earns very little in "profits" because they have expenses in licensing fees between their own companies that effectively pushes the profit to countries with very low corporate tax rates.
This all sounds sinister and it certainly is clever. But I don't see an easy way to fix it. I don't think a tax system where countries can tax profit that never enters its borders is viable. How would the UK feel if the Cayman Islands levied a tax on profit earned by UK companies?
a very heavy handed approach that will almost certainly fail in the real world would be to tax corporate revenue, not profit. This is VERY invasive and I would not recommend it at all but I don't see an approach that is simple enough like this that does not require international co-operation.
In my simple mind, the failure is in defining profits. How do we define profit? The devil is probably in the details. *
If Wally's world buys widgets for $6B and sells them for $10B but then turns around and spends $5B on long term infrastructure, did they make a profit? Do they owe any taxes?
Something closer to home: Once we get into the details, it is very easy to get lost in there. When they spend $100 per hour to hire a consultant (programmer), does that count as capital expenditure? How?
I am not a lawyer and I am definitely not an accountant. I would imagine loopholes can be closed but it requires technical expertise that I lack.
* Perhaps only allow cross-border expenses to countries that honor a certain level of agreement?
PS: I am not so sure about taxing income in other countries. None of what I say applies to expatriating money from overseas. It only applies to monies a company makes in our country and tries to ship overseas. If Apple sells $100B worth of iPhones in the UK, should they pay corporate income tax on it in the US? Why not pay corporate tax on that in the UK?
I think he means invasive as in it would affect companies' bottom lines more. Imagine something that primarily runs on a razor thin margin and makes up in volume and has $100M revenue and $5M profit, versus a company that has high margin and has $50M revenue and $5M profit. The first would be taxed much higher even though they have the same amount of profit.