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Wednesday, August 29, 2012

U.S. Firms Move Abroad to Cut Taxes

Well, we have been told that some companies that moved their operations overseas are moving back to the good ol' USA.  But, we are now told that some public companies are moving their place of incorporation overseas to cut their tax burden, among other reasons. 



  1. Ok, then we should hope that they still like to outsource.

    1. Nice observation Tom. It appears, if I understand correctly, that the companies are only moving their place of incorporation. So they are not moving their operations out of the U.S. Based on the way the article reads I would say that they have operations inside AND outside the U.S. and by incorporating outside the U.S. they will no longer be subject to taxation in America for their operations abroad. As is correctly pointed out, in general America taxes citizens and even resident aliens and some nonresident aliens for 100% of their worldwide income, with a credit for taxes paid in other countries. If they have operations in a country that has a lower tax than in the US then their credit from that country will not offset the US tax, so they do not benefit from the lower tax rate of the country where they produced the income.