As the economy has been slow to rebound in the past few years, many have turned their attention to issues of corporate taxation. While some claim that cutting corporate taxes in the U.S. is key to sparking growth, particularly among small businesses, others have been vocal about closing tax loopholes that allow larger corporations to avoid paying their fair share. At the recent G-8 summit in Northern Ireland, leaders pledged to crack down on corporations that engage in questionable tax practices.
Many experts see the problem of collecting corporate taxes as fundamental to the health of the overall economy. In order to make foster a low-tax environment that promotes business growth, it is necessary to collect the taxes that are due.
One difficulty is deciding on how to implement any plan that would help governments all over the world to determine whether a corporation is paying the right amount of taxes. At least one group has suggested the creation of a central corporate registry that would make it particularly difficult for companies to hide assets in foreign shell corporations.
Of course, businesses in the U.S. and elsewhere are likely to oppose any such plan. Global corporations move money from entity to entity, they argue, for legitimate reasons. Any tax benefits gained are well within the boundaries of the law. Focusing only on corporate tax issues is not likely to solve underlying problems in the tax code. These efforts also do nothing to fix the fact that the U.S. has particularly high corporate tax rates that make it expensive for companies to do business here.
Source: NPR, “G-8 Nations Pledge to Crack Down on Corporate Tax Evaders,” Jim Zarroli, June 19, 2013© 2014 by McBrayer, McGinnis, Leslie & Kirkland, PLLC. All rights reserved.