Tag Archives | UK Taxes

Multinationals seek tax heavens, er, havens . . . oh, what’s the diff?

More and more U.S.-based corporations are growing wings and flying away from their U.S. tax obligations.

Bloomberg puts it as simply as possible: “U.S. companies looking for lower tax bills are heading for the exits, and Congress is doing nothing to stop them.”

The immediate impetus for the story was Pfizer’s proposed purchase of AstraZeneca, which would result in Pfizer reincorporating in Britain while tapping literally billions of dollars it has been holding outside the U.S., as The New York Times reported.

What’s the solution? Congress could grow a set and change the tax laws so that there is a crackdown on companies that use tax havens to keep profits outside of the U.S. system, as Steven Rattner suggests. Rattner also suggests in essence giving up on taxing corporations and instead increasing taxes on profits at the shareholder level, which would effectively increase the taxes paid by the wealthiest Americans.

I don’t know what the solution is, but when you consider that the effective federal tax rate paid by corporations has dropped from more than 40% in the 1950s to about 15% today, it seems clear that something has to change.

The Grass Isn’t Greener On The Other Side Of The Pond

Grass Isnt Greener 1 e1295569839330 The Grass Isn’t Greener On The Other Side Of The PondTaxpayers in the U.S. have to deal with paying taxes in the states in which they live or work.  I have clients who receive income in several states, and we have to file returns for each state in which they have earnings.

That’s not fun, but it’s understandable.  But imagine having to pay taxes to a country that you visit, but in which you don’t even earn anything.  That’s the potential situation facing Tiger Woods, who could find himself subject to tax in the United Kingdom if he plays in the Ryder Cup—which doesn’t pay anything to participating golfers.

As The Independent reports the U.K. can attempt to collect taxes on a portion of worldwide income from athletes and other entertainers who perform there—even if the performers don’t actually earn any money while in the U.K.  In Woods’ case, visiting Wales, where the Ryder Cup is being held in 2010, could generate a tax bill of around $1.5 million.  That’s no chip shot.