One multinational firm that is located in theUnited States and exported to other countries is Adidas.
With the current taxpolicy business is allowing the gross margin to improve by 49.3%, had grew in Asianmarkets by 15% and were up 11% in the European Union. Right now it is a Germanmultinational corporation that offers multiple products and is the secondlargest sportswear manufacturer after Nike. This strong brand throughout theworld would be possibly affected by the new proposed taxation policy by othercountries not wanting to perform business with a company working with theUnited States. Under the current system, multinationals are taxed on incomeearned overseas. They don’t pay the tax until they bring the profits home. As aresult, many corporations leave it parked overseas. Under the territorialsystem, they aren’t taxed on that foreign profit.
The foreign companies willhave to pay ten percent on all payments to their foreign parents whenperforming business with United States companies. Section 4. Comment on whether the proposed taxation policy will stopcorporate inversions.Companies move their agencies overseas, knowing the taxpurposes, so that they are able to continue sharing the same benefits of theU.
S. companies including markets and laws that other American workers have tofollow.The new actions made by the Treasury Department would make it more difficult for companies to discover the inversionsloophole. I appreciate the new rules discouraging tax inversions, but I believethat Congress could do more and close the nation’s tax loopholes withcorporate inversions. According to www.taxfoundation.
com,the delays in the tax on the earnings of foreign affiliates of a USmultinational companies with business operations across several countries untilthe earnings are distributed to the multinational or invested in the UnitedStates. I believe with time the proposed taxation policy may minimize corporateinvestors but, for now I believe they will continue to take over small UScompanies and receive the same benefits as Americans receive.Belowthe chart displays economic activities are much less sensitive to tax ratedifferences across countries. By measuring the tax sensitivity we are able tocalculate what the profits would be in the countries of operation of U.S.
affiliates and the differences in tax rates between foreign countries and theUnited States.(www.taxpolicycenter.org) This proves that the problem isshifting between U.S. multinational firms.
The effective tax rates are notparticularly low and none of these ten countries has an effective tax ratebelow twelve percent. The sources below provide a more in depth research thatexplains how proposed tax policy will continue to be challenged in hopes thatone day it will be able to resolve the corporate inversions that are affectingour economy.