Links: Profit Shifting Solutions and Internet Sales Taxes
September 18, 2013
The OECD continues their work on base erosion and profit shifting. One component of their plan is to help create an “automatic exchange of information” so tax authorities can find undeclared income more easily. Instead of relying on the OECD, the U.S. could fix the issue of base erosion, profit shifting, and allegations of tax evasion by encouraging businesses and money to come here and stay by fixing the corporate side of the code. And the individual side, while they're at it.
Speaking of tax evasion, the creator of Beanie Babies plead guilty to tax invasion. The indictment alleges H. Ty Warner placed money in a Swiss bank account with “the intent to ‘evade and defeat’ taxes on $3.1 million in foreign income.”
A developer in Syracuse, New York wants $615,000 in tax breaks to build a 146-bed student apartment complex. Under current state law, the developer is already eligible for a property tax exemption (8 years with a 4 year phase out afterwards) on the value added to the project, which is likely to cost the government thousands of dollars a year.
Rep. Bob Goodlatte, the Chairman of the House Judiciary Committee, released his principles for online sales taxes. They are: 1. Tax Relief. 2. Tech Neutrality. 3. No Regulation without Representation. 4. Simplicity. 5. Tax Competition. 6. States’ Rights. 7. Privacy Rights. We’ve written on the topic before here, here, and here and should have more to come soon.
From Tax Analysts: “The corporate tax–with its arbitrary and excessive burden on the profits of certain businesses–is our most damaging tax. A broad-based consumption tax, like a VAT — which unlike the income tax is not inherently biased against saving and investment — causes the least harm to the economy.” A better solution than a typical VAT may be replacing the current system with a cash flow tax that taxpayers pay once a year. This removes the distortion against savings in the current code, while making the amount of taxes paid more transparent than with a typically structured VAT, which are generally small and dispersed.