Tax the Rich! by Morris Pearl

Author:Morris Pearl
Language: eng
Format: epub
Publisher: The New Press
Published: 2021-04-15T00:00:00+00:00

Multinational corporation is just a ten-dollar term for a company that conducts business in more than one country. You might expect that if a company does business in more than one country, that company would pay taxes in more than one country. That would be a reasonable expectation, but the devil is in the details. Our system allows corporations to pick and choose where they want to claim income and where they want to claim losses, all of which ends up dramatically shrinking their total tax bill.

Say there’s a company that buys coffee beans, hires workers, and rents space in the United States to make coffee and sell it to people in the United States. It also buys coffee beans, hires workers, and rents space in Ireland to make coffee and sell it to people in Ireland. In that scenario, it’s more or less straightforward to calculate the profit in the United States and the profit in Ireland, and the company can then pay a percentage of its U.S. profit to the IRS and a percentage of its Irish profits to the Irish version of the IRS.

A large company that serves people coffee might have thirteen or fourteen thousand stores in the United States and five or six dozen stores in Ireland, so one might expect the company to pay a lot of taxes in the United States (at around the 21% corporate rate), and a little bit of taxes in Ireland on the profits from the sixty or so stores in Ireland (at Ireland’s 12.5% corporate rate). But that’s not how it works at all.

A lot of large companies have what is called intellectual property—the right to use some piece of knowledge or information—protected by a copyright, a patent, or a trademark. Unlike real property—land, buildings, and other things that are either incredibly difficult to move or cannot be moved at all—intellectual property can be moved easily. For example, the right to publish something can be moved easily. If someone in Australia wanted to publish a book, the right could be granted to them as fast as clicking “send” on an email.

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