CorporateTaxes 101.

       Last week I suggested taxing US corporations for profits they make overseas that are not taxed. Low and behold comes Apple to testify before Congress Here's the deal with them. They create a subsidiary in Ireland. They transfer all or most of their intellectual property rights to this subsidiary. Then the subsidiary charges Apple for the right to use the property. That way, Apple can show little or no profits in America.
       The reason for doing it in Ireland is because they worked out a deal with the Irish government to allow them to pay a whopping 2% in taxes instead of 35% to America. But the best part is they can go before the Senate and claim to have paid every cent they owed in taxes. Unfortunately, they're right. Our tax laws don't prohibit this kind of maneuver. It would be illegal to shift profits overseas, but it's not illegal to pay for the use of intellectual property and deduct that amount from your profits.
       Ya see, there's no law against being sneaky. But here's the problem, if I had a couple of thousand I wanted to hide, there's no way for me to do it legally. I can hardly send it to Ireland and expect to have such a good outcome. What if I won the lottery and transferred my good fortune for picking the right number to a subsidiary in Ireland? Would that then relieve me from paying any taxes on that money? All I'd have to do is go to Ireland to spend the money.
       It's just that I'm not so sure I'd want all my money in a place like Ireland. I just don't drink that much whiskey. What if I wanted to bring it back to America? Then America would want me to pay taxes on it. But a big corporation like Apple, they don't mind that their money is in Ireland. They can afford to fly over there any time they want. Heck, they probably have their own plane they can set on automatic pilot and fly directly to the bank they probably now own over there.