While many reliable sources in Washington are saying that the odds of either President Obama’s corporate tax reform bill or Republican Camp’s bill getting passed this year are slim to none, some states aren’t waiting to conduct their own reform..
While many reliable sources in Washington are saying that the odds of either President Obama’s corporate tax reform bill or Republican Camp’s bill getting passed this year are slim to none, some states aren’t waiting to conduct their own reform. According to Pew Reports, a number of states are targeting offshore “tax havens” in new litigation that will allow them to recoup the more than $20 billion that they lose to the technique each year.
Photo by Anastasia Taioglou on Unsplash
By shifting income to offshore subsidiaries in places like the Cayman Islands, Bermuda and a number of other tax havens, companies are able to avoid paying both state taxes and federal taxes in the U.S., where the marginal rate is significantly higher, according to the news source. While technically these companies are required to pay U.S. taxes when they repatriate the money, there is currently no limit on how long they can defer repatriation. This may serve as a disincentive for investing in U.S. labor, construction or goods, because the money can only be spent abroad.
Maine is now looking at litigation that will mirror tax law enacted in Montana in 2004, according to Pew Reports. The bill being considered would name 38 known tax havens and attempt to put a stop to incentives to move money to them.
Robert Pozen, a reporter with The Wall Street Journal, has a different plan for recovering the tax on the estimated $2 trillion held abroad. He suggests a transitional tax rate on foreign profits of 12 percent, which would lead into a foreign “competitiveness” tax of 17 percent, which would only come into effect after local international taxes. For example, if local taxes amounted to 15 percent, for example, the tax owed to the U.S. would be only 2 percent.
There are a number of ideas present in Washington, D.C., and in state governments as to what should be done about the corporate tax problem, but it is unlikely that the U.S. will see a change any time soon.
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
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