July 14, 2006 02:24 PM | Permalink |
What is the United States trying to do when it comes to taxing multinational corporations?
Companies that do business only in the United States have to pay federal income taxes on their profits (at least as the tax code defines “profits”). We want multinational corporations—both American-owned and foreign-owned—to pay taxes on their U.S. earnings, too. That’s the main goal.
In addition, at least some of the time, we try to make American-based multinationals pay U.S. taxes on the profits they earn in low-tax foreign tax havens. The purposes here are both to raise revenue and to avoid giving American companies a tax incentive to move their operations—or artificially shift profits—to low-tax foreign countries.