Policymakers have mentioned that the reform might be an essential part of the plan in 2014: TBA Association Reports

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<p><p><p>Earlier this year, The New York Times published an interesting article by David Leonhardt about the U.S. corporate tax system and the probability of its reform in the immediate future. One of the main points in the feature is the amazing variance in the corporate tax rates for businesses in various sectors. For instance, businesses with particularly mobile products, such as concentrate to make soda, can easily shift operations to low-tax territories. Companies with intangible assets like software manufacturing can structure their accounting so that revenues are reported in low-tax jurisdictions.

According to data from financial data collection firm S&P Capital IQ (and pointed out by the New York Times),disclosed the overall tax rate (consisting of federal, state, local, and foreign taxes) of the following companies are: Amazon.com, 6 percent; Boeing, 7 percent; Apple, 14 percent; General Electric, 16 percent; Google, 17 percent; eBay, 19 percent; and FedEx, 23 percent. These tax rates are astoundingly low considering that the nominal U.S. corporate tax rate is 35 percent, which doesn't take into account state or civic taxes.

However, those with brick-and-mortar operations, commonly merchants, pay higher gross tax rates: Wal-Mart, 31 percent; CVS, Best Buy, the Gap, and Whole Foods all paid tax rates around 35 and 40 percent. Exxon Mobil, due mostly to rigid foreign tax rates, paid 37 percent. Small companies that do not have worldwide operations are not able to obtain an advantageous tax rate by transmitting earnings to a low-tax jurisdiction, although they can of course select to incorporate in a particular U.S. state to decrease taxes.

The problem with the variation in what should be a definite <a href="http://www.maldharisamaj.com/index.php?do=/blog/186622/congress-has-suggested-that-the-reform-might-be-a-crucial-part-of-the-plan-/" title="TBA Court Tax Attorney">corporate tax rate</a> is that the tax code is essentially selecting winners and losers rather than leaving that choice to the free market. There is no ready explanation for why the producers of soft drinks must pay less taxes than the seller of soft drink. There is significant consensus throughout the political spectrum that the nominal corporate tax rate should be lowered (perhaps to 25 percent) and specific deductions and tax credits eliminated; although, whether that reform needs to be revenue-neutral is going to be the topic of much debate.

While there is bipartisan support for tax code reform among political leaders, lobbyists are likely to frustrate issues. A coalition of company teams called Let's Invest for Tomorrow (LIFT), which consists of huge names such as Caterpillar, Coco-Cola, and Proctor & Gamble, wants to move the U.S. to a "territorial" tax system. Under this system, the U.S. would only tax the part of a business's profits that is earned as a direct result of U.S. operations. Under the current "worldwide" system of taxation, the U.S. imposes tax law on U.S.-based businesses on their worldwide profits but will grant them a tax credit for what's paid to overseas governments.

The issue with LIFT's proposal is that it allows large businesses to simply shift their dealings to low-tax foreign locations, while less prominent U.S. businesses pay far greater rates. Naturally, sound arguments can be made in favor of <a href="http://www.nextbuy.com.br/fox/index.php?do=/blog/171875/policymakers-have-indicated-that-reform-could-be-a-key-part-of-2014s-agenda/" title="Asset Protection TBA Certified">lower tax rates</a>, however it is antithetical to progressive taxation to tax big, U.S.-based international businesses at lower rates than smaller ones with specifically domestic operations, specifically when multinational businesses depend heavily on benefits offered by the U.S. (a court system with recognized legal precedents and a substantial, regulated securities market, for instance). The piece notes that a compromise may be possible; the U.S. may potentially adopt a territorial system but enforce a minimum tax on any business in America. So if a U.S.-based soda-maker transfers their operation to another country and pays a 3% tax rate, the U.S. can impose a tax on the company's revenues to the point that the company pays a pointed out minimum rate (say, 15 percent) on its worldwide profits. Policymakers have said that reform might be a crucial part of 2014's agenda.