Why is it not a felony to avoid taxes by offshoring jobs and US business activities?

Question

If The corporation makes profit from its business activities in the US, why should they not pay the taxes in the US as anyone who gets a paycheck working in the US?

Judy, I admit that our tax system is full of unfair loopholes put there by corrupt legislatures trading favors for campaigb contribution. To just say its legal and leave it at that is an incomplete answer. The Q presumes that such activities are morally and socially wrong if the intention is to avoid paying their fair share of taxes. ignores. I think a fair tax system requires that individual persons and corporations (an association of individual persons) that enjoy the social and physical infrastructure that makes it possible to generate profits in the US all pay their fair share of the costs to operate and maintain the infrastructures. TWH 05252007-2

extra_37, I am familiar with the distinction between tax avoidance and tax evasion. But my point is that tax avoidance which may be legal is still a way to circumvent the social and moral responsibility to pay their fair share of the costs of providing and supporting an environment in which they operate and earn profit.

bostonia, don't be an amoral jerk. You criticize my Q by asserting I did not give a reason for my position. I gave a reason, the strongest reason I know why avoiding taxes legally is immoral. If anyone eats at the profit table, they should be responsible, decent and honorable and help pay for all the services and physical structures (ports, highways, etc) that enable them to sit at the table and earn profits. There is no free lunch. And, tax avoiders, legalized tax evaders are just trying to eat for free and not contribute their fair share to the costs which have to be paid for. Next time you top contributor posts an answer try to read the Q and try to support the answers you give in an intelligent and honest manner.TWH 05252007-3

If Asking the Q makes me a politician, your answer makes you what? An ....

bostonia, someone who has asked only 3 Q's and has wracked up over 70,000 in answer points, has no standing in my book to attack other peoples'Q's.

Answer 1

Very simple. There is no legal obligation to be socially or morally correct. One only need follow the law. Tax avoidance isn't against the law. You asked why it isn't a felony and then follow through with an ambiguous argument about social or moral "responsibility". Which is it? You sound just like a politician!

Answer 2

Corporations, like individuals, pay taxes on their worldwide income. So if XYZ Corp has a net loss on its US business of $1M and net income in the EU of $2M, then XYZ will have a taxable income of $1M before credits etc.
There is a fine line between "tax avoidance" which is legal and "tax evasion" which is not.

Answer 3

You don't avoid taxes, you simply move them. If you move a business to another country, you become a business of that country. You are no longer an American business, you don't draw on American resources to do your business. Instead you pay taxes to the new country. The tax level is usually significantly lower (and that's why it's done) but in no way is it illegal, nor should it be.

Answer 4

Uh, maybe because there's no law against it, it's a perfectly legal thing to do?

Answer 5

Why would it be?





That's what I thought.