“Repatriation Tax Holiday”: Choosing Words Strategically

“Tax Repatriation Holiday”:  Choosing Words Strategically

[A more legible .pdf  version of this posting is downloadable at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1963951.]

“The real goal . . . is to determine what ‘story’ a client wishes to tell about his product and then find a word that evokes it—and spurs the impulse to buy.”[1]

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Tax policy turns on terms.  Witness the deliberate and effective popularization of the term “Death Tax.”[2]

Now, the “product” being offered in H.R. 1834[3] is a temporary, targeted 85-percent dividends received deduction:  an ultra-low tax rate on foreign earnings that U.S. multinationals have trapped in offshore subsidiaries, most often in tax havens.[4]  Its common name is “Repatriation Holiday.”[5]

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Tax Law’s Look-through Rules Can Address Citizens United

Whatever merit there is to granting corporations the Constitutional right of free speech, as the Citizens United case does, there is no merit to granting that right to foreign corporations.  Or to U.S. subsidiaries of foreign corporations.  Or to U.S. corporations owned by foreigners or — for goodness’ sake — by foreign governments.

Fixing this anomaly would take a Constitutional amendment at this point.  The Supreme Court is unlikely to reverse its 5-4 decision:  the Justices most likely to leave are dissenters.

I’m not saying States and the Federal Government should be obligated to restrict speech of foreign-influenced entities.   But governments should be able to say those corporations can’t contribute to campaigns or spend money to influence American elections.

Tax law provides plenty of precedent for denying or granting rights to corporations based on ownership. For instance, a controlled foreign corporation is one in which U.S. shareholders own more than 50 percent, by vote or value.  Code section 957(a). Continue reading “Tax Law’s Look-through Rules Can Address Citizens United”

Gruesome tax

The Raleigh paper published the letter below (they like short ones).   I titled it “Terrifying Tax Tactics,” but that may have been too much to print in one column.
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Not-so-scary tax

North Carolina’s inheritance tax applies only to folks who meet their Maker while worth over $5 million. Just in time for Halloween, the tax-exempt Civitas Institute said it’s a gruesome tax that turns Revenue Department officials into grave robbers (Oct. 30 Under the Dome).   That kind of rhetoric aims to frighten us and stop us from thinking. Boo!

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