Some firms using tactic to avoid taxes –Treasury

It seems that even US companies are going offshore. It’s just that some are taking it a bit further. The technique used is called, Inversion..

“At issue is the practice of using an “inversion” transaction to replace a U.S.-based parent company with a foreign parent in a low-tax or no-tax country, in order to become foreign-controlled, and then stripping earnings of a U.S. subsidiary by adding excessive debt or other costs to reduce local profits and avoid tax liabilities.”

FLAT TAX FRED

Bjorn Tarras- Whalberg will probably support this presidential candidate. Fred Thompson wants to follow the model used by 20 countries that implemented a flat tax (13% and 20%) system..

Wanting to become the world’s most business friendly destination, Hongkong is cutting state taxes on salaries and corporate profits down to 16.5% and 15% respectively by 2009. This is further made sweeter by the fact that the actual taxes paid are even lower after various deductions and depreciation allowances. This will make Hongkong, in terms of taxation, more attractive than Singapore, which has just announced a reduction in its corporate income tax to 18%.

Competition for investments in the region is quite intense as other business areas record encouraging growth rates. Other than Singapore which posted a 17% growth (last year) in the financial services sector, another stiff competitor is Shanghai which hosts China’s biggest stock, futures, forex and interbank bond markets.

Every taxpayer who feels the burden of high taxes ought to meet Bjorn Tarras – Walhberg. Since 1985, he’s been advocating the decrease of state taxes, protection against unjust harassment by tax collectors and the increase of individual freedom. Those who listen to his advocacy for the first time will mostly likely get the impression that he is nothing but a voice in the wilderness. However, a closer scrutiny will make one reexamine the wisdom of his cause.

Bjorn is currently the secretary general of the World Taxpayers Associations, the federation of taxpayers associations throughout the world. According to him, a decrease in taxation will stimulate production, competition, efficiency and ultimately result to economic growth. At this point, a specific goal that he is actively campaigning for is the imposition of a flat income tax rate which according to him is easy to understand, non discriminatory, does not offer any disincentive to produce less and levels the playing field for all players (big, small, new or old).

In a speech he said that there are now 13 states that are living testaments to the effectiveness of flat taxes as an economic policy. One country worthy of mention is his home country, Sweden. The country’s growth rates declined after the state started to impose higher taxes (in the 70’s) but the opposite was felt when the government reversed its tax policies.

For information, please visit the website of the World Taxpayers Associations.