The Pros And Cons Of Tax Inversion
One of the highest corporate income tax rate is represented by the United States system. Many companies seek for effective ways to decrease their tax bills without break U.S laws. Obtaining a new legal address abroad, it is a current and favored strategy to lower corporate tax rates. In other words, change a company address to another country with the purpose to lower its tax rates is a ‘Tax Inversion”.
Since in 1982, more than 50 U.S. Companies have been incorporating …show more content…
Republicans and Democrats do not support any kind of inversions; they do not agree how to deal with them. Federal Government is recollecting less tax revenues each consecutive year because inversions. A study shows that companies are holding more than $2 trillion in capital outside of the U.S. boarders. Because once a company decides invert, it is no longer U.S. taxpayer.
Tax inversion is a form of tax avoidance. Why? Because tax inversion is perfectly legal, so it is not a kind of tax evasion. Even though the purpose of tax inversion is to lower or pay less taxes, Internal Revenue Service permits to qualify for certain deductions. When a company invert, it is not hiding any income or part of the underground economy. They must pass by an process, and qualify some characteristics approved by the government.
An important economic impact occurs when a city faces an inversion as Miami or any other city in the United States. Because when a tax inversion is applied to any company , it makes more expensive to bring the business back than keep moving their money outside borders. An example is globalization. Companies decide to invert more money worldwide that includes more job opportunities than bring services