Martin Lobel: Why Is Treasury Protecting Tax Havens for Multinationals?

The US Territory of Puerto Rico, with 3.5 million US citizens has been coded as a Foreign Country by this establishment so they have an offshore tax shelter for tax evasion with the benefit of US protection. This is a scam to the US Tax payer.

I also ask, if these companies, who make business in Puerto Rico make such extraordinary amount of money..... how come Puerto Ricans are under the poverty line with uneployment at >17% and per-capita at $14,000.

If this is so good for the economy, how come 600,000 persons left Puerto Rico in the last decade and relocated to one of the 50 states?
Miriam Ramirez
mjean1@gmail.com
Martin Lobel: Why Is Treasury Protecting Tax Havens for Multinationals?:
Everyone -- except Treasury, apparently -- agrees that our international tax system, which is based on transfer pricing, is broken. Because U.S. multinational companies are allowed to expense foreign costs as they are incurred and can wait to pay tax on foreign income until it is repatriated, they can avoid paying taxes that their domestic competitors must pay. That gives multinational companies a competitive advantage and incentives to move profits and jobs offshore through transfer pricing. Yet every IRS commissioner who has ever testified has admitted that the IRS cannot effectively police transfer pricing -- it's like policing the New Jersey Turnpike on a bicycle. But that hasn't stopped Treasury from opposing changes suggested by the OECD to prevent corporations from transferring profits to tax havens.

We must change our international tax system, if only to protect the interests of the shareholders of multinational companies. There is more than $1.7 trillion of unrepatriated profits offshore that could be used to pay dividends. During the last tax holiday, in which repatriated profits were taxed at only 5.25 percent, subsequent studies showed that most of the money repatriated was used to pay dividends, despite a provision in the legislation prohibiting that use. Because multinationals cannot use in the United States the $1.7 trillion of profits they have offshore, they pay lower dividends or have to borrow to pay for them.