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http://ourfuture.org/20140715/a-simplified-way-to-tax-multinational-corporations
"You’ve been hearing a lot about corporations “renouncing their U.S. citizenship” through “tax inversions.” This is when a company buys or merges with a non-U.S. company and claims to no longer be based in the U.S. to get out of paying certain taxes. The company does, however, keep the same employees, executives, buildings, sales channels and customers it had inside the U.S. before the switch.
The epidemic of tax inversions represents just one of many ways corporations are dodging their taxes by taking advantage of our outdated and rigged corporate tax system. It is time for a serious debate about corporate taxes, and on Monday a new report by District Economics Group economist Michael Udell offered a bold new alternative that is so radically simple that even the most clever corporate tax accountant would have a hard time finding a way around its fair and universal proposition: If a company sells products or services in the U.S., it must pay taxes on the U.S. proportion of its worldwide sales.
But first, let’s explore how today’s complexity enables corporate tax avoidance.
Are We “Broke” Or Just Not Collecting The Taxes We Are Owed?
“America is broke,” declared House Speaker John Boehner a few years ago. But clearly the country is not broke; we are just being robbed, as many corporations create ways of avoiding, dodging, shirking and generally not paying their taxes. The share of federal revenue coming from corporate taxes has dropped from around 32 percent in 1952 to around 8.9 percent now. As a share of gross domestic product it has fallen from about 6 percent of GDP then to less than 2 percent now. Meanwhile the rest of us – including small domestic companies that don’t have armies of tax consultants – have to make up that shortfall, either through increases in things like payroll taxes, or through cuts in the things government does to make our lives better.
Our big problem is that the big, multinational corporations use so many tax avoidance techniques that it is difficult to keep up. One of the larger dodges is that we allow corporations to “defer” (i.e. never pay) taxes on profits made outside the U.S.. So they engage in all kinds of schemes to make it look like their profits are not made here. As a result many companies owe very little tax on the proceeds from their U.S. operations, and then defer their non-U.S. profits from being “brought home” to avoid paying the taxes on non-U.S. sales.
It is estimated that as much as or even more than $2 trillion of taxable profits are being hoarded outside of the U.S. because of deferral. Meanwhile, the corporations lobby for a “repatriation tax holiday” to let them bring these profits back with little or even no tax..."
