Political And Legal Disadvantages Of The American Jobs Creation Act Of 2004

795 Words Nov 1st, 2014 4 Pages
Political and Legal Disadvantages
For many corporations, the prospect of relocating abroad is a possibility; consequently, relocations can be costly and are accompanied by several political and legal issues. These corporations move their operations offshore to remain competitive in the global marketplace, but many people view these expatriations as unpatriotic. This section will cover two political and legal issues that include the American Jobs Creation Act of 2004 and the US tax revisions by the Treasury.
II. The American Jobs Creation Act Of 2004
A corporate inversion, as described by the US Department of the Treasury (2014), is a transaction in which a U.S. based multinational restructures so that the U.S. parent is replaced by a foreign parent, in order to avoid U.S. taxes. Many anti-inversion bills have been introduced since the 1990s but none have successfully passed legislation until the American Jobs Creation Act (AJCA) of 2004. The American Jobs Creation Act of 2004, under section 7874, looked to limit inversion deals that created tax benefits for domestic companies. Currently, President Obama and his administration have tightened tax laws to discourage US corporations from moving their headquarters to low-tax countries. The continuing revision of tax laws by the US government and tax policy modifications by foreign governments have made relocating more complicating than it once was.
The American Jobs Creation Act of 2004 was created to deny the tax benefits…

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