Maybe I am being naive here, but why can’t the IRS treat taxation of companies that claim too be based outside the U.S. but have substantial revenue in the U.S. similar to how they treat individual taxpaying citizens. As a citizen abroad, if I don’t qualify for the foreign earned income exclusion (which is another issue in itself), then I pay tax in the country I am a resident of BUT I also fill out a U.S. tax return and compute what tax I would have paid on that income if I had been living here. If this latter amount is greater than the amount I paid to the other country, then I have to pay the difference to the U.S.
Applied to corporations, this sort of system would eliminate the incentive to pretend you are based overseas because you would still end up paying the same total tax you would have paid if based here.
Ok, jshore, but the dodge consists of shifting revenue to low tax areas and costs to high tax areas. Otherwise known as transfer pricing. Imagine selling yourself a hammer for $500. I believe the current or last issue of Mother Jones gave a similar (not identical) example.
Right, multilateral treaty on proper tax treatments --although I suppose that the people Sam Stone likes to read will prefer bilateral treaties for their ‘unique’ value-- along the lines of say the Basel accords (perhaps in conjunciton with Basel II?).
One could leverage the terrorism/money laundering angle, which is a growing and legit concern to get our more neanderthalic analysts on board as it appears only hanging red-meat national security issues can attract approval to some concepts.
Setting a certain minimium standard for treatment --although it comes to mind we also have WTO implications here-- for taxing authorities in re domiciling, etc. I think is likely to have real usefulness. Given that post September there has been some real willingness to crack down (e.g. Luxembourg is presently under OECD pressure in re its secret banking practices) on the grey and black areas of international capital flows, one could end up with some positive, yet market friendly solutions.
BTW: the assertion that only real property is a basis of taxation is just plain idiotic. Not only would such a policy be highly regressive, it would be distortive, pushing capital into none RE investments at a non-economic rate.
Bloody hell, next someone will come in to tell us only gold is real money.