The comments of James Henry appear to assume that the #CookvTait Principle of extra-territorial taxation is correct

cross-posted from renounceuscitizenship blog

My last post featured the comments of Apple CEO Tim Cook about the ongoing debate over whether U.S. companies should be punished for their strict compliance with the absolutely archaic, dysfunctional, overly complex tax laws of the United States of America. It has reached the point where it appears there are two classes of corporations that Homeland politicians and groups like the Tax Justice Network dislike:
Group 1 – U.S. Politicians dislike those U.S. companies who do comply with U.S. laws; and

Group 2 – U.S. Politicians dislike those U.S. companies who do NOT comply with U.S. laws.

These sentiments were recently expressed by James Henry of The Tax Justice Network who makes the point that:

The interview with Mr. Henry is fascinating. Mr. Henry is opposed to “territorial taxation” for Corporations. This suggests that he might be opposed to “residence based taxation” for individuals.
I would appreciate you commenting on what you think of Mr. Henry’s interview. What are the key points that he makes? What (if anything) does he say that is relevant to the RBT vs. CBT debate? Do you get the impression that Mr. Henry believes that U.S. companies are the property of the U.S. government?

By the way …

Here is Tim Cook’s testimony before the Levin Committee in 2013:

One thought on “The comments of James Henry appear to assume that the #CookvTait Principle of extra-territorial taxation is correct”

  1. Obviously these simplistic thoughts on Mr. Henry’s stance come from a lay person that quite readily falls into a brain fogged stupor regarding any sentence including the words tax law. From this perch:

    1. He justifies his position simply because world-wide tax has always been the law regardless of how it is currently working. It has no relation to ethics, logic, morality, longer horizons, does not adjust for unforeseen or simply unthought of (due to the inability to actually think) consequences and only relates to immediate greed. A greed that will, in the longer horizon, be counterproductive, ditto for CBT. They just cannot stop drinking the Kool-aid, cannot think in broader, longer terms.

    2. It hurts small businesses. I would think the current laws hurt small businesses ability to grow and expand to international markets.

    3. I am unable to follow the logic that if the original value of a company was created in the US then all profits overseas should be taxed even if taxed in the local jurisdictions. Does this render the company owned by the US government rather than the company being an entity in itself? Why would anyone start a business in the US if ultimately successful it would then be rendered indebted to the government and doubly taxed?

    4. If profits, already taxed in another country where the profits were earned, were repatriated to the US tax free and reinvested in the business this would logically benefit the US economy. I would assume this would grow the business, employ more people, raise their income thus increase tax revenue. Even if it simply lined the pockets of US investors, if taxed properly, would benefit the US.

    5. Everything the US does regarding tax policy seems counterintuitive and short sighted Why is it that CBT/international corporate taxes exist for a pittance in return (as the larger companies leave or fail to repatriate profits) but carried interest is never addressed? This alone would seemingly garner greater deposits into the Treasuries coffers. There seem to be many policies existing where power alone dictates the laws/loopholes, not the wellbeing of the nation as a whole or tax fairness. The root of this problem appears unsolvable without term limits and abolishing lobbyists.

    What mystifies me is that the legislators seem to lack the courage or intellect to address tax policy and these absurd counterproductive laws are allowed to fester, simply relying on precedent. They are incapable of restructuring according to changing conditions even if beneficial. Arrogance, ignorance and a US-centric narrow perspective make for self defeating bedfellows. The US consistently seems unable to discern the broader implications of their policies whether it be in the destabilizing of the Middle East, their forcing of corporate inversions or the unprecedented rise in renunciations. They make a complete mess then expend enormous ineffective resources reacting to the mess, never grasping they singularly created the mess. They never seem able to think through broader implications, to even conceive the utterly predictable self destructive end results nor find a rational solution in reaction to the situation they find themselves in. Relying on outdated precedent rather than innovative evolving solutions seems a fool’s errand.

    My lay diagnosis: They are simply a bunch of intellectually challenged, short-sighted, greedy bullies with big bombs and reserve currency status. The world is being ruled by idiots incapable of conceiving how they are shooting themselves in the head. The US has become ungovernable and incapable of understanding nor reacting in their own best interest. The motto of might is right seems their only guiding light.

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