Walgreens renouncing U.S. corporate citizenship

[Cozarkian]

That's ultimately the best answer. Until and unless the public holds the company to account by 'voting with your wallet', the overall benefit to the country / citizens doesn't get into the decision making process. By attaching a real bottom line cost to decisions that harm the country, you force companies to re-think their strategy and make better decisions.

Of course, since Walgreens is accomplishing through inversion what Google, Apple and Facebook accomplish through leaving money in offshore accounts and lobbying Congress for a repatriation tax waiver (avoiding U.S. income tax on foreign income), just boycotting Walgreens isn't a sufficient solution.

Also, what about foreign retailers that open stores in the U.S., like H&M? They have the exact same tax rules as companies like Walgreens will after inversion. If H&M incorporated in the U.S., it would owe more in U.S. taxes. Should we boycott H&M for failing to request U.S. citizenship?

 

[emperus]

I couldn't understand the blatant hypocrisy on the right. But then I realized their last presidential candidate had multiple off shore accounts.

I guess wearing that US flag pin makes it all better. Lol.

 

[Fern]

Businesses should pay tax on their gross income made in the U.S. to the U.S. just like we have to pay income tax on our gross earnings. That would stop all this tax dodging BS.
That being said the tax rate should not be 35%, it should be between 5-10%.

"Gross income" would be an odd concept for taxation; it basically means sales less COGS. Perhaps you meant gross revenue, if so that would be a bad idea for many reasons and possibly unconstitutional since it's not an income tax.

In any case, I suspect there is much being incorrectly inferred from this article. The author appears to be neither a CPA or attorney. I.e., he is not expert in taxation and likely doesn't understand it; unfortunately this is the norm these days.

An "Inversion" does NOT exempt income from US activities from US taxation. Many here post as if it does. Again, this is the result of a poor article by someone writing about a subject that they appear to know little about.

An inversion allows foreign income to be taxable only in foreign countries.

So, no need to worry Walgreens will be paying tax to the USA on its profits earned here.

Are you stupid?!
It all gets passed on to the consumer. That's how business works. But at least making them pay on their gross here the money would stay in the U.S. instead of going to Ireland, the Cayman Islands, or some other hole that only exists to assist tax evasion.

I can't see how any of the above makes any sense and Ireland does not exist soley to assist in tax evasion (it's been around for millennia). BTW: tax evasion means illegally avoiding tax; nothing in the article is illegal by any stretch.

Also, another BTW, the Cayman Islands is a financial center because there simply isn't any other businesses outside of tourism it could support. It also cooperates with the US and other Western countries' tax authorities so it is a poor choice for for tax evasion.
https://www.treasury.gov/resource-c...NAL US - Cayman Islands - Cayman alternat.pdf

-------------------------

TLDR: The article is poo because it's misleading people to think Walgreens won't paying US income tax on its US business.

Fern

 

[Fern]

I'm in favor of a very simple rule on this issue. All companies conducting business in the U.S. need a federal tax identification number. Any revenue from goods sold in the U.S. are services provided to someone in the U.S. are taxed as income. Expenses are deductible only if they were incurred within the U.S.

I'm actually surprised to find that it doesn't work like that and that Walgreen can avoid taxes by incorporating elsewhere. If they sell goods at stores in the U.S. they should pay taxes on those revenues in the U.S. not in some other country.
-snip-

It DOES work like that.

Article is misleading.

Fern

 

[Cozarkian]

It DOES work like that.

Article is misleading.

Fern

Read my later post, I did some more digging because I was so shocked that my idea wasn't already the rule in place and discovered that the inspiration for the article appears to be the report I linked by an organization with substantial bias that deliberately avoided explain the actual details to support its agenda.

 

[Cozarkian]

"Gross income" would be an odd concept for taxation; it basically means sales less COGS.

The poster said "just like we have to pay income tax on our gross earnings." Thus, I think it is clear that when the poster typed "gross income," he/she actually meant taxable income.

I don't know why you think "gross income" is an odd concept for taxation, though, since gross income, is in fact, the starting point for U.S. income tax. Take gross income, apply above-the-line deductions to get AGI, then apply further exemptions/deductions to get taxable income, calculate the tax, and apply credits.

 

[Fern]

The poster said "just like we have to pay income tax on our gross earnings." Thus, I think it is clear that when the poster typed "gross income," he/she actually meant taxable income.

I don't know why you think "gross income" is an odd concept for taxation, though, since gross income, is in fact, the starting point for U.S. income tax. Take gross income, apply above-the-line deductions to get AGI, then apply further exemptions/deductions to get taxable income, calculate the tax, and apply credits.

As regards "gross income" being an odd concept for taxation - I was referring to business/corporate taxation. Taxing a business/corporation on revenue less cost of goods sold makes no sense to me. Also, I have been a tax CPA for +35 years and worked in other countries; I cannot recall ever seeing a tax on gross income.

Despite what some literature says individuals are not taxed on gross income. Most individuals are employees and do not have business expenses and thus are not taxed on gross income in reality. Exemptions and itemized deductions are generally not business related. (Although in some cases employees may have unreimbursed business expenses and, if so, they are deductible on Sch A subject to 2% of AGI. But it is not common.)

Otherwise, self employed individual will have business expenses and those are deductible before AGI (e.g., on Sch C). I.e., they are not taxed on "gross income" either. It is only net income that they are taxed on.

Fern

 

[dmcowen674]

I have been a tax CPA for +35 years and worked in other countries

Wow, cool

I saw you already stated Walgreens will still be paying taxes.

Couple of questions:

I'm sure it would still be less than what they are paying now otherwise why make the move?

Do you support all these Companies becoming Foreign entities?

 

[OverVolt]

http://www.theonion.com/video/more-american-workers-outsourcing-own-jobs-oversea,14329/



I was saying in some other thread "The only thing that'll be american about our companies in 20 years is where their stock is traded."

 

[Engineer]

http://www.theonion.com/video/more-american-workers-outsourcing-own-jobs-oversea,14329/



I was saying in some other thread "The only thing that'll be american about our companies in 20 years is where their stock is traded."

The Nasdaq is all electronic. Won't be an issue to move the servers to India or some other country. Problem solved.

 

[Fern]

-snip-
Couple of questions:

I'm sure it would still be less than what they are paying now otherwise why make the move?

That's a question? (Sounds like a statement and, if so, you'd be correct.)

In any case, as I've said above their inversion will allow foreign source income to be taxable only in that foreign countries (or countries). Most countries only tax income earned within their borders. However, the US taxes its citizens and corporations on world-wide income. It's a bit glutenous.

The US will, however, give a tax credit for taxes paid to other countries on income earned in those countries in an effort to mitigate double taxation. E.g., (Note the US corporate tax rate is 35%) if the foreign country's tax rate was 35% (or greater) the credit would fully cancel out any tax owed to the US.

If the foreign country's tax rate was lower than 35% (the US tax rate) the corporation would pay the additional amount to the US. E.g. the foreign country rate is 15%, then a 20% tax would be paid to the US. (Total tax of 35%, less foreign tax credit of 15%, equals 20% tax paid to the US.)

It's because our corporate tax rate is the highest in the world that inversions are being done. If our rate was the same or lower there would be no benefit to it.

Do you support all these Companies becoming Foreign entities?

I don't care either way. But a couple of comments:

1. What makes a corporation a "US company"? I would think it would be ownership. If so many "US" corporations are not US companies at all as much of the ownership is foreign. If it's just where they are registered I don't see how anybody should care either way. And beyond the technicalities an inversion is nothing more than a changing of the registration.

2. Much of our US companies' growth comes from business abroad, not here. While I personally own no stock whatsoever, I can see how shareholders of US companies would support such moves so that their company can compete with other foreign businesses.

As I've said here before, corporations are simple yet logical 'animals' that can easily be manipulated/motivated by the rules we enact. In this case I think it perfectly clear that such corporations are moving abroad because our laws motivate them to do so. If one doesn't like them moving abroad the solution isn't difficult, in fact it's rather obvious; it's just that ideology triumphs over logic.

Fern

 

[Fern]

http://www.theonion.com/video/more-american-workers-outsourcing-own-jobs-oversea,14329/



I was saying in some other thread "The only thing that'll be american about our companies in 20 years is where their stock is traded."

Sar-Ox has gone a long way towards that end. Emerging companies' stock used to be traded in NYC. Now it's all in London and Germany (Frankfurt IIRC).

Fern

 

[werepossum]

Continue to pay their own way. The bigger question is what will Democrats do?

lol You sir are made of win.

To make this a political issue means you support business as usual and the status quo. Glad this tactic was brought to my attention.

Not that my dollars matter, but once Walgreens flips the switch, I boycott them indefinitely.

You and me both.

Businesses should pay tax on their gross income made in the U.S. to the U.S. just like we have to pay income tax on our gross earnings. That would stop all this tax dodging BS.
That being said the tax rate should not be 35%, it should be between 5-10%.

I agree with all that, but if Walgreens decides to incorporate out of the country to save money on taxes, I'm going to help them saving even more by making sure I never shop there. No sales equal no taxes.

I'd love to see the corporate tax abolished, all capital gains income taxes as wage labor (admittedly with long term gains indexed to promote true investment), and really strict interpretation of income via corporate benefits. (i.e. if there is a company retreat and a company jet and a dozen people are allowed to use them, the costs are divided proportionally among those dozen people as income.) But behavior should be judged against the framework of the laws we have, not the laws we'd like to have, unless the laws are immoral. High corporate tax rates may be stupid and counterproductive, but they aren't immoral.

 

[werepossum]

It DOES work like that.

Article is misleading.

Fern

In theory. In reality, Walgreens Cayman Islands can buy a widget for the same $10, sell it to Walgreens USA for $19, sell it to the consumer for $20, and presto chango cut their taxable American income by 90% by mere accounting. And as a side benefit of our high corporate taxes and Walgreens' pursuit of higher profits come hell or high water, 90% of Walgreens' corporate profit will now remain outside our economy.

 

[Fern]

In theory. In reality, Walgreens Cayman Islands can buy a widget for the same $10, sell it to Walgreens USA for $19, sell it to the consumer for $20, and presto chango cut their taxable American income by 90% by mere accounting. And as a side benefit of our high corporate taxes and Walgreens' pursuit of higher profits come hell or high water, 90% of Walgreens' corporate profit will now remain outside our economy.

In theory. In reality every one of those of those pricing schemes must be approved by the IRS.

Such schemes are easier with I.P.

I think recently entering foreign markets in a big way has prompted this move: http://articles.chicagotribune.com/...620_1_walgreen-shares-walgreen-plans-pharmacy

Fern

 

[MongGrel]

No real surprise here.

About like all those Supreme Court Justices Dubya appointed for life that are making corporations religiously valid now.

Now Anything associated with Sam Walton can move off shore and shove the money in the Caymans legally I guess with no intervention, and the Supreme court can make them and Independent Person who can force their religious beliefs on whoever works for em.

Go go Murica.

This country has become a fucking mess.

 

[werepossum]

In theory. In reality every one of those of those pricing schemes must be approved by the IRS.

Such schemes are easier with I.P.

I think recently entering foreign markets in a big way has prompted this move: http://articles.chicagotribune.com/...620_1_walgreen-shares-walgreen-plans-pharmacy

Fern

No problem, they just have to donate a few million to Common Cause and Moveon.org and they are golden with the IRS.