Washington Seminar On Corporate Expropriation

Tax-News.com, Washington

07 May 2002

The Center for Freedom and Prosperity will be holding a Heritage Foundation seminar in Washington this Friday, May 10th, under the title 'Understanding Corporate Expatriation: Is it Good Business or Unpatriotic Behavior When Companies Re-Domicile in Low-Tax Jurisdictions?'

Presentation will include:

• "Why Do Corporations Expatriate?" by Tim Hanford, Federal Policy Group
• "Territorial Taxation: Creating a Level Playing Field" by Daniel Mitchell, McKenna Senior Fellow at the Heritage Foundation
• "Why Fiscal Competition Should be Preserved" by Andrew F. Quinlan, Center for Freedom and Prosperity

The CFP says that the U.S. taxes companies on their "worldwide" income, an approach that makes American-based companies less competitive. A U.S. firm competing against a Dutch firm for business in Ireland, for instance, would have to pay a 35 percent tax on its income - with the lion's share going to the IRS. The
Dutch firm, by contrast, only pays the 10 percent Irish tax on its Irish-source income because Holland has a "territorial" tax system (the common-sense notion that a government only taxes income earned inside a nation's borders). In an effort to remain competitive and protect the interests of shareholders and workers, some U.S. companies are re-chartering in low-tax jurisdictions. A company that expatriates to one of these jurisdictions no longer has to pay U.S. tax on its overseas income. This
enables the company - which still maintains substantial U.S. operations and pays taxes to the U.S. government on all income earned in America - to compete on a level playing field with foreign competitors.

Some politicians want to stop expatriations. Senators Max Baucus and Charles Grassley are pushing a proposal that would arbitrarily declare that certain companies are based in the United States regardless of where they are chartered. The panel will discuss whether expatriation should be prohibited and review different ways of keeping companies chartered in the U.S.

The meeting will take place at 12:00 noon at the Capitol Hill Club in the The Capitol Room, 4th Floor. Please RSVP to Crystal Gibson, (crystal.gibson@heritage.org), either by e-mail or by calling 202.608.6078.

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