Corporations and Tax Bills Imbalances

If one goes by May reports of R.G Associates, a research firm, there is a wide disparity when it comes to paying taxes among companies. The report said that 78 of the largest American companies- ranging from technology giants like eBay and FB to Corning the glass manufacturer and Kraft Heinz the food behemoth, would have earned about 15 percent less in 2015 if there were no benefits from overseas tax rates. These rates are much lower compared to the United States. The stocks of all these companies went up almost 20 percent during 2015.

These benefits are besides the well-publicized ones like Apple using illegal breaks so as to pay almost zero taxes in the course of 11 years in Europe. Regulators have cottoned on to such practices and ordered the company to pay massive amounts of money-in the billions- in back taxes. This ruling also brings to light a worrying schism among the biggest corporations in the world. A few pay little amounts in taxes while others pay huge amounts to the taxpayer. In fact, taxes paid abroad and also in the United States by technology companies like Apple made up 24 percent of the total profits during the 10 years’ period through 2014. A report by Credit Suisse said that the energy companies paid almost 41 percent-the double given by technology companies.

Experts have recognized this problem. They hold the view that a tax system which divides the companies into losers and winners raises concerns related to fair play. There is also the wisdom of utilizing tax codes so that it actually shapes corporate behavior. Investors are also vulnerable to such behavior. There is also the constant headache of the companies which have transferred headquarters out of the United States to be the subject of a tax crackdown.  It is difficult to know which companies are vulnerable as the tax rules are extremely complicated. A huge amount of money is also involved in the matter.

Jack Cieselski of R.G Associates said that it is known among the company top staff that in case if their companies moves operations and profits all over the world to escape the paying of taxes, then the companies will be check mated in regulations after a certain point of time. He added that the European Union is an expert in catching companies adept in tax evasion.

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