Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: J_F_Shepard who wrote (612667)	5/24/2011 12:04:06 AM
From: i-node	1 Recommendation Read Replies (1) of 1583716

>> So they don't pay taxes anywhere???? The methodologies employed are much more nuanced than that. As pointed out by Brummar corporations are taxed on ALL their income, but allowed a credit for taxes paid to other countries (this is not unlike what is typically done amongst the states in the US, and is generally considered a reasonably "fair" way of handling the situation). Generally, to take advantage of these situations involves things like transfer pricing. Transfer pricing is the price paid on sales between two related companies. Have you ever even considered this problem? How does a government determine the price at which a transaction must take place between two corporations, even if related? Even the managements of two sister corporations often can't come to terms over it. A corporation that owns both a sawmill and a particleboard plant may insist that wood chips will be purchased from the sawmill; the sawmill wants a fair profit, and the particleboard plant wants to go into the market and get the best price it can get. The end result is difficult to negotiate in a way that is fair to both respective managements. Now, you insert government into it, and it corrupts the entire process. The same problem plays out with all manner of difficult accounting issues. If a single corporation owns both a consumer and a builder of particular equipment, you have a similar problem. Yet, it is also a problem that can be turned into a tax advantage if the corporations are located in different taxing jurisdictions. At the same time, intercompany debt can used to avail a parent corporation of beneficial tax situations. These are complicated regulatory issues in which government involvement will lead only to increased complexity and disruption of the most reasonable economic arrangements between the parties. That's not a good thing. These issues just don't lend themselves to regulation.

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