One is a German multinational corporation that offers

One multinational firm that is located in the
United States and exported to other countries is Adidas. With the current tax
policy business is allowing the gross margin to improve by 49.3%, had grew in Asian
markets by 15% and were up 11% in the European Union. Right now it is a German
multinational corporation that offers multiple products and is the second
largest sportswear manufacturer after Nike. This strong brand throughout the
world would be possibly affected by the new proposed taxation policy by other
countries not wanting to perform business with a company working with the
United States. Under the current system, multinationals are taxed on income
earned overseas. They don’t pay the tax until they bring the profits home. As a
result, many corporations leave it parked overseas. Under the territorial
system, they aren’t taxed on that foreign profit. The foreign companies will
have to pay ten percent on all payments to their foreign parents when
performing business with United States companies.

 

Section 4. Comment on whether the proposed taxation policy will stop
corporate inversions.

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Companies move their agencies overseas, knowing the tax
purposes, so that they are able to continue sharing the same benefits of the
U.S. companies including markets and laws that other American workers have to
follow.
The new actions made by the Treasury Department would make it more difficult for companies to discover the inversions
loophole. I appreciate the new rules discouraging tax inversions, but I believe
that Congress could do more and close the nation’s tax loopholes with
corporate inversions. According to www.taxfoundation.com,
the delays in the tax on the earnings of foreign affiliates of a US
multinational companies with business operations across several countries until
the earnings are distributed to the multinational or invested in the United
States. I believe with time the proposed taxation policy may minimize corporate
investors but, for now I believe they will continue to take over small US
companies and receive the same benefits as Americans receive.

Below
the chart displays economic activities are much less sensitive to tax rate
differences across countries. By measuring the tax sensitivity we are able to
calculate what the profits would be in the countries of operation of U.S.
affiliates and the differences in tax rates between foreign countries and the
United States.(www.taxpolicycenter.org) This proves that the problem is
shifting between U.S. multinational firms. The effective tax rates are not
particularly low and none of these ten countries has an effective tax rate
below twelve percent. The sources below provide a more in depth research that
explains how proposed tax policy will continue to be challenged in hopes that
one day it will be able to resolve the corporate inversions that are affecting
our economy.

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