IRS Sues Facebook For $9 Billion, Says Company Offshored Profits To Ireland (foxbusiness.com) 103
An anonymous reader quotes a report from Fox Business: Facebook is slated to begin a tax trial in a San Francisco court on Tuesday, as the Internal Revenue Service tries to convince a judge the world's largest social media company owes more than $9 billion linked to its decision to shift profits to Ireland. The trial, which Facebook expects will take three to four weeks, could see top executives including hardware chief Andrew Bosworth and Chief Technology Officer Mike Schroepfer called to testify, according to a document the company filed in January. The witness list also includes Naomi Gleit and Javier Olivan, veterans of Facebook's aggressive growth team, and Chief Revenue Officer David Fischer.
The IRS argues that Facebook understated the value of the intellectual property it sold to an Irish subsidiary in 2010 while building out global operations, a move common among U.S. multinationals. Ireland has lower corporate tax rates than the United States, so the move reduced the company's tax bill. Under the arrangement, Facebook's subsidiaries pay royalties to the U.S.-based parent for access to its trademark, users and platform technologies. From 2010 to 2016, Facebook Ireland paid Facebook U.S. more than $14 billion in royalties and cost-sharing payments, according to the court filing. The company said the low valuation reflected the risks associated with Facebook's international expansion, which took place in 2010 before its IPO and the development of its most lucrative digital advertising products.
The IRS argues that Facebook understated the value of the intellectual property it sold to an Irish subsidiary in 2010 while building out global operations, a move common among U.S. multinationals. Ireland has lower corporate tax rates than the United States, so the move reduced the company's tax bill. Under the arrangement, Facebook's subsidiaries pay royalties to the U.S.-based parent for access to its trademark, users and platform technologies. From 2010 to 2016, Facebook Ireland paid Facebook U.S. more than $14 billion in royalties and cost-sharing payments, according to the court filing. The company said the low valuation reflected the risks associated with Facebook's international expansion, which took place in 2010 before its IPO and the development of its most lucrative digital advertising products.
Oh damn! (Score:2)
How do you pick sides in this battle?
Re:Oh damn! (Score:5, Informative)
That is the most dumb statement ever.
Think of this: Without taxes, there is no effective government. Without government there would be no Internet. Without the Internet, there would be no Facebook.
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Telcos. They evolved a packet switching network. It's inevitable that they eventually would have created something like the internet.
Computer companies. Corporations would inevitably have demanded worldwide interoperability by protocols based on open standards. They would have built either a radio-based packet switching network or piggybacked on the phone company... As they did. And of course there was UUCP and USENET before there was widespread participation on the internet. I used to be hung off two SCO U
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I honestly wonder how motivated the Telcos would have been to evolve from circuit switched to packet switched network without a strong outside motive and competition. Their business was circuit switched voice.
The first big commercial packet switched network was Telenet, which was mostly run by guys from ARPANet.
I suspect the telcos do eventually evolve more packet switching, but I think they need a business motivation to do so. Even when the Internet was exploding, they were really dragging their feet at
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Telcos.
I wonder how Telcos would have existed without the legal frameworks necessary to protect IP or the government trappings that make infrastructure possible. Anything beyond a hunter-gathering society is made possible by one form of formal/formalized government or another.
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You cite two other government sponsored projects to show that governments are not necessary? FAIL!
"The state telecom built and operated the underlying infrastructure for the network," [theatlantic.com]
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Without government, your region would be over run by the army of the nearest country with a government. You would be called nomads, more animal than man and they would have missionaries embedded in the army to, burn at the stake incorrigibles obviously possessed by demons, thrown in prison or put to useful labor and fed and housed in a civilized matter and the whip using sparingly. Is that not exactly how the USA was founded by other governments ie UK, France, Spain. No government equals anarchy and no defi
Re: Oh damn! (Score:1)
"Rape, pillage, murder, enslavement was how every large country ever was formed"
FTFY
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Yes, we could still be dialing into AOL or MSN.
And your 2 examples are just different governments investing in networks.
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Your statement isn't much better. Without oxygen there are no criminals!
The existence of effective government is not evidence to expand government. Just like the existence of bad government is not evidence to eliminate all government.
> no facebook
We can only dream.
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But of course it is. With no government, the internet wouldn't have been built in the first place, and Facebook wouldn't exist. That's just an objective face. The only thing holding your counter-analogy together is libertarian derp.
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> With no government internet wouldn't have been built
With no government the genocide of millions of people wouldn't have happened in the 20th century. I guess if the choice is between the debatable existence of the internet and the death of millions of people. The "libertarian derp" has a lower cost in blood and we might have less cat videos.
You missed my point.
Let's assume you are correct and the internet wouldn't exist without the government. Does that negate the fact that governments have murdered mi
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And just when I thought the derp couldn't go any higher. First, what does that have to infrastructure built via right-of-ways and government investment, and second the first world war happened because capitalist arms manufacturers were pumping up an arms race. So you can thank capitalism for WWI, and thus WWII as well.
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That's true, we would all be on CompuServe, Prodigy, and America Online instead. Also Minitel. Facebook would have to be its own online service that you dial into or access via FidoNet or similar.
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> Without taxes, there is no effective government
[[Citation]]
> Without government there would be no Internet
Minitel: Am I a joke to you? [wikipedia.org]
> Without the Internet, there would be no Facebook.
And nothing of value was lost.
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What's your point? Minitel would not have happened without government support.
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Side with Facebook.
Nah, of course not. We should be taxing capital, not labor.
I mean, it really doesn't matter. The money doesn't exist. It's just promissory notes on Wall Street wagers. There's nothing to collect except the few trinkets within arms reach, well, and the real estate, and we can put the guy to work in the soup kitchens for a few years.
No, we definitely don't side with facebook. It was just a play on the evil IRS bludgeoning regular taxpayers vs the evil facebook hypnotizing the helpless viewe
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That's like saying the mob is better than the government. The government is accountable to us, if we choose to exercise our power. Facebook isn't even directly accountable to shareholders.
You are basically saying "Unaccountable tyranny is better than democracy." I strongly disagree.
Government is good. It is the collective power of We, The People. Together, we are stronger than our oppressors. We can bring the self-styled elites to heel. It is only when we fall asleep at the wheel, letting the sociopaths tak
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GP has not read Snow Crash.
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The IRS may be evil but in this case I am siding with them because I want to see big multinationals forced to pay more tax instead of being able to use tax havens to get out of paying tax when other businesses can't avoid it.
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How do you pick sides in this battle?
You don't. It's lawyers fighting lawyers.
Hope, at best, it's not the government siccing its dogs on someone who hasn't paid their nudge nudge play the game wink wink tax "donations"
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It's lawyers fighting lawyers.
Yeah . . . and all those lawyers on both sides will earn a bundle fighting, regardless of who wins.
It's just like a world title boxing match.
Re:Oh damn! (Score:5, Informative)
Our government might get to a point where we don't need deficit spending, and the 50% of us that actually pays taxes don't have to shoulder the entire burden. FB and every other company needs to pay its share. And that 9B includes penalties that could have been avoided.
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Yep, the people in power make a difference. And its not all about the president either, elected officials at all levels make a difference. I don't know *how* to fix our tax code but that doesn't mean we *should not* or *cannot* try to fix the tax code. We can start by enforcing what we have.
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Re: Oh damn! (Score:1)
Good grief - don't you get bored regurgitating the same old fake-moral-outrage talking points?
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Ah, the old "Trump's Okay Because You Have No Justified Moral Outrage" defense. Actually, the alleged president is even worse than Seigne1 opined. The alleged president wants to remove Truth as curated by news organizations so that his is the loudest voice heard.
I do credit Trump with showing the intellectual poverty of Republicans and the moral poverty of the Christian right. No one could have done as fine a job as he in that endeavor, and get those groups to love him for it.
Re: Oh damn! (Score:1)
"Truth as curated by news organizations"
What you naively call "Truth" (with a big T!), most people now see as obvious propaganda.
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Ah haha, no. Trump didn't build a three billion influence peddling organization based on taking bribes in return for favors, the Clinton's did. The only area Hillary wasn't as bad or worse than Trump was she didn't boast about "grabbing women by the pussy". But asked the hundreds of thousands of women killed or raped during Hillary's wars
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Err...using roughly $500 million in U.S. taxpayers money as blackmail over Ukraine doesn't register on your radar? Thank you for showing us precisely of what you are made.
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You say that like I was writing an exhaustive list??? As the AC says, that was Biden not Hillary, and the blackmail was for a billion dollars.
The sort of person who has a problem with horrible politicians no matter which party they belong to???
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Wtf? You think having an actual democracy is 'a joke popularity contest' and it's better to keep in place an archaic system which allows any deep-pocketed oligarch wannabe to money-ball the election by focussing on the key states instead of the entirety of the populace even though they rule equally over everyone? One question: why?
What good does this do to anyone? It's always easier to lie to a
Re: Oh damn! (Score:1)
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Well yeah, that's why I used him and Trump as examples. The point is that using a direct democracy approach will combat this better, because someone like Trump or Bloomberg is not likely to gain the support of the majority of all americans, whereas Trump showcased that by targetting swing states with deep pockets it's possible to buy one's way to the presidency via a minority vote.
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Replying to myself to correct myself to correct a typo: meant to say 'Should have used him or Trump', I did not mention them in the original comment, but they're the prime example of this right now.
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Corporations mostly don't pay taxes because economists say its semi-pointless to tax corporations because they just pass taxation back to consumers as higher prices.
The implication here is that corporate profit beyond some point is basically a consumer tax anyway, it just doesn't get passed onto the government as revenue.
Capturing this is really difficult, because new taxes will result in higher prices to help maintain corporate profitability.
I don't know what the answer is, but its probably tied to changin
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Corporatist urban legend. Every business sets their prices as high as they can without driving away too many customers. Increases in taxes or the minimum wage have no impact on that formula. If a company can increase prices without loosing too many sales, they won't wait for an increase in wages or taxes as an excuse to do so. They'll just go ah
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Yeah, but if you impose taxes uniformly all businesses in a sector will raise their prices to counteract the lost profitability taken by taxes. It's not just GM that will raise their prices, the prices for all cars will go up and the previous level of price differential between carmakers will return.
Corporate taxes are just another cost that goes into calculating the price, you're not going to tax corporations into zero profitability. The best you can do is basically marginal taxation that assumes they wi
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Our government might get to a point where we don't need deficit spending,
Maybe the government can spend less.
Taxation is nothing less than the government robbing you under the threat of a gun.
Re: Oh damn! (Score:1)
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I'd like to see how you fare when all of the things that taxes pay for disappear. In theory, we pay taxes for the benefit of everyone - in exchange we get things like roads, sewers, courts, and a lot more. Maybe the government can spend less but if the government spends zero then we all suffer. I'm not arguing amounts here I'm arguing that Facebook should pay its taxes the same as other businesses and individuals. The IRS seems to think that Facebook made an intentional error on its taxes, I'd guess the
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Our government might get to a point where we don't need deficit spending, and the 50% of us that actually pays taxes don't have to shoulder the entire burden. FB and every other company needs to pay its share. And that 9B includes penalties that could have been avoided.
This is a very foolish comment.
Businesses don't pay taxes. Ever. Not really. The money they appear to pay in taxes always comes from customers, employees or (rarely) investors. And the companies get to decide (collectively, not so much individually) how the tax expenses get allocated across those sources. What are the odds that they allocate them in a nice, progressive fashion? Zero, basically. They'll always hammer the end customers and the lowest-paid employees the hardest, the higher-paid employee
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On the other side, if a business could raise prices to get more profit then they already would regardless of the taxed percentage. If they did raise prices under a higher tax percentage then a competitor could still undercut them by making less profit. Because we'
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if a business could raise prices to get more profit then they already would regardless of the taxed percentage.
But UBI opponents keep saying if people had more money businesses would just raise prices exactly as much to counter this.
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They already do that to the maximum extent possible. New taxes and higher minimum wages aren't going to change that formula as all prices are always set at what the market will bear.
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"The money they appear to pay in taxes always comes from customers, employees or (rarely) investors. "
This is only true if all economic acts are zero sum. However, productivity is pretty much what makes capitalism successful, and what distinguishes capitalism from mercantilism. To deny productivity is to deny capitalism.
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That's just an excuse for corporate greed, and like the similar line about minimum wages leading to hire prices, it holds no water. All prices are always set to maximize revenue. If a company can jack up their prices without driving away too many customers, they won't wait for an increase in taxes/wages for an excuse to do so. They'll just do it and pocket the ex
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I am old enough to remember that there was a real fear in the late 90's among economists that we might end up with too few US bonds for a stable market, since every player eventually needs some safe investment. Even recently there have been times where the US could borrow at a negative real rate because the risk of other investments was considered unacceptable.
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You're actually quite the insufferable elitist if you think sales, property, special assessments and government fees aren't "taxes". Which all but the most destitute pay. Yeah, some states don't have sales taxes, but that still leaves the rest.
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The subject is income taxes, to which my comment refers. I get to pay all of those other taxes too, most of which are local rather than federal. In the end, after all of the crap you can come up with, I still pay more and that is the point. Its not about being elitist - would you or anyone you seem to refer to be willing to avoid a larger income because of higher taxes? And I don't mean people right on the cusp of a tax bracket/change - I mean if you could go from making $10/hour to making $100/hour wou
Re:Oh damn! (Score:5, Insightful)
Obviously facebuck will get out of paying with not even a slap on the wrist.
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Obviously. It's cheaper to "donate" $9 million to politicians than pay the $9 billion they actually owe.
If there were any justice, some senior facebooks execs would be going to Club Fed over this. In America, Cheat $10,000 on your taxes, go to jail. Cheat $9 billion = profit.
corporations are people, aren't they? (Score:1)
The Supreme Kangaroo Court sez corporations are people too. So why can't we just force Facebook to confess, then toss it into the gulag? That what DUH LAWR does for everyone else.
Re:Oh damn! (Score:4, Interesting)
US taxes are ABSURD.
Out of curiosity, what is a reasonable corporate tax level then? It's currently at its lowest level [tradingeconomics.com] since the US joined WW2, and is very similar to the current average EU corporate tax [tradingeconomics.com].
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US taxes are ABSURD.
Out of curiosity, what is a reasonable corporate tax level then? It's currently at its lowest level [tradingeconomics.com] since the US joined WW2, and is very similar to the current average EU corporate tax [tradingeconomics.com].
Now now, don't bring facts to the table dude. That's not how slashdotters roll.
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What does the US do? That's like asking "What have the Romans ever done for us?"
https://www.youtube.com/watch?... [youtube.com]
In point of fact, US taxes are absurdly low. It only feels unfair because those taxes go to the military industrial complex, farming subsidies, and propping up failing banks. I mean, people in Europe pay more in taxes than we do, but they feel they are getting their money's worth because the taxes actually go to infrastructure and social programs that benefit them.
Simple answer: taxes are what bu
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That paid for what got a lot of US brands started.
Also provided the freedoms to start working as a brand in the USA.
Try asking for the freedom to invest and start a company in the EU nations
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What percentage of Facebook's revenue comes.... (Score:2)
That percentage of their profits should be allowed to be "offshored" to Ireland.
Either that, or they can stop trying to be an international company.
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Quite a lot. That's the point.
Ireland has a ridiculously low tax rate for offshore companies, so Facebook directs its revenue to Ireland instead of where the revenue was actually earned (other EU countries).
Part of the issue is that Ireland is running a scam against other EU countries.
Who wants to bet Trump will just pardon them? (Score:1)
Aren't they being sued in Ireland too for not paying that tax money there, either?
For an pardon it costs an 1B campaign donation! (Score:2)
For an pardon it will cost facebook an 1B campaign donation!
Confusing title (Score:5, Insightful)
They are being sued for fraud when setting up the 100% legal offshoring scheme. They understated the value of the IP when shipping it over, and that's fraud.
The "fix" is that when something owned by a public corporation is valued for tax purposes, they should be required to put it up for sale for that number. So if they value the trademark "facebook" at $1 and ship it to Ireland, then Bob the Internet Troll should be allowed to send $1 to [formerly Facebook] and become the new owner of Facebook.
When something is valued on books but not "real" there will always be these frauds. Facebook was just more blatant and obvious than most. But everyone else does it too.
Re: Confusing title (Score:2)
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A more fair ending is to tax all revenue. Taxing only adjusted profits means they will do everything possible to adjust profits. Taxing all revenue
I guess (Score:2)
Those hearings didn't like what Zuckerberg said so now big government is gonna teach him a lesson.
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The lesson being when setting up your offshore "business" to avoid taxes, don't understate the value of assets you transfer there?
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You're either with us, or you're against us. (Score:2)
Zuck says he won't ban political ads in addition to their existing censorship of political groups.
Soros calls for Zuck to be removed as CEO of Facebook [bbc.com] on the basis of being a 'Trump collaborator'.
IRS launches this massive lawsuit.
It's very well possible or likely these events have nothing to do with each other. On the other hand, there's more than one way to skin a cat.
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Spend 15 years with giant parties blowing the left's wee wees, helping form cancel culture, donate heavily.
Just goes to show you are only useful to politicians until you are not.
The real concern is both parties are threatening to hurt the Internet companies for not censoring in the way the politicians want. This should be scary to us, but for many it isn't.
Re:You're either with us, or you're against us. (Score:4, Informative)
Or alternatively, the head of the IRS is Charles Paul Rettig appointed by a Republican Senate - (who a Democrat wanted jailed for not handing over Trump's tax returns).
And he answers to the head of the American Treasurary Steven Mnuchin appointed by the Republican Senate.
Maybe this is a case of the IRS going after a company for actually skirting the law, rather than the "left's wee wees turned on them".
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The real concern is both parties are threatening to hurt the Internet companies for not censoring in the way the politicians want. This should be scary to us, but for many it isn't.
It just shows that appeasement doesn't work. You're either full in for the cause like Google or Twitter in allowing for full control of the narratives, or you're a target. Just being a greedy slimy surveillance capitalist isn't allowed, when you're sitting on that much potential influence over such large membership.
It's not even a 'both sides do it' deal. It's all western nations are in a downward spiral towards corporate censorship sort of situation, where media control (internet or otherwise) is consolida
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We have many examples of actual words of politicians planning to hurt these companies because of not censoring, or censoring the wrong way. A benighted, disinterested government in such a situation is highly unlikely.
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Hope IRS loses (Score:1)
https://www.forbes.com/sites/r... [forbes.com]
Until the Government itself gets out of the scam and cheating game first, it has no right or ethical excuse to force others to pay taxes. I wish my fellow citizens would figure this simple thing out.
but like I always say... people LOVE corruption in their governments... as long as it benefits them.
But, its the government... the most classical excuse for double dipping, lying, cheating and stealing with near impunity. The Ultimate Double Standard.
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/Oblg. America has the best government money can buy! /s
--
Don't steal, The government hates competition.
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oh no... that should definitely not be sarcastic.
it is a true enough statement. But do not forget this is also all governments in some form which means the US is nothing special here. There is a reason that people get rich in government and why people consistently vote in rich people to run government.
No matter how much people say otherwise... they LOVE RICH PEOPLE!
There are endless legions of people that idolize rich movie stars, rich athletes, rich politicians, rich musicians... I mean how many poor her
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And as for your other statement, you have it upside down: movie star become rich because people idolize them. When Jennifer Lawrence or Brad Pitt started then weren't rich, even though after a few movies they were, but by that time they were already famous.
Corporate tax rate (Score:1)
Everybody has lower corporate tax rates than the United States. Communist Cuba has lower corporate tax rates than the United States.
At a comparable corporate tax rate to the rest of the world, most companies would forego all this wacky shuffling of profits, and the actual corporate tax revenue to the U S Treasury would be a whole lot larger.
But noooo, that would be a giveaway to teh nasty evil horrible oppressive capitalist pig exploiter corporat
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So the United States was one of five countries with tax rates of 35% or higher in 2016, but dropped to 21% in 2018.
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The world is never enough for corporations. Both times companies were given large tax breaks in the last 20 years, they spent 95% of it on stock buybacks instead of hiring more workers or reinvesting in the company. Even no taxes wouldn't be enough for them. I guarantee you even if taxes were nothing, they would continue lobbying they deserved kickbacks from the government for doing business because "jerbs". It's not much different than pro sports pitting cities and states against each other to basically gi
News source other than Fox? (Score:2)
Others are no better (Score:2)
See: Russiagate for just one example. There are others, like their coverage of the Democratic Primary, where even PBS [commondreams.org] left Sanders out of a story on the candidates that spent time on no name candidates with no chance.