I think the taxes Google, Apple, et. al. are avoiding aren't imposed by that U.S. Code. The profits are not earned by U.S. Corporations; they're earned by alien corporations. In order for this regulation to cover these alien corporations, large parts of precedent, legislation, and regulation would have to be repealed/rewritten.

Intuitively, it feels bad. But until the profits actually come back to the U.S., the USG doesn't have much of a case.

I do think that EU countries, the EU parliament, and the European Council have a responsibility to their citizens to close these loopholes. It is not fair for Ireland to have a minor advantage (a few thousand jobs) at the cost of depriving other EU countries of billions of Euros of tax receipts.

The double irish is going away come the year 2020:

https://en.wikipedia.org/wiki/Double_Irish_arrangement

"The profits are not earned by U.S. Corporations; they're earned by alien corporations." These alien corporations are then owned by proxy by US corporations, THUS a violation of 26 U.S. Code § 7201. It isn't a "it feels bad" thing, this is just a felony.

The revenues are being earned from foreign citizens in foreign countries using foreign infrastructure.

Why should that tax revenue instead go to a different country that didn't contribute to it?

No, those shell offices were paid for by stolen american tax money, ran by foreign citizens controlled by proxy, using infrastructure controlled by proxy, producing things for the original company. "Why should that tax revenue instead go to a different country that didn't contribute to it?" Because it is a felony.

The cash used to "build" the offices was already taxed as net income. And what if it's a lease? Fixed cost investments happen all the time.

The employees in the offices are citizens of that country or immigrants approved by the local government of that country. If they are U.S. citizens then they typically pay income tax to the U.S. (depending on the reciprocity).

The infrastructure (roads, water, energy, police & fire protection, healthcare, etc.) being used by those offices and employees were paid for by that country.

Also the citizens in that country are the ones paying for a product or service - so again, why should a different company reap the tax revenue?

The argument that these large corporation's lawyers are putting forward is that the taxes aren't imposed on them by the tax code because the US government only taxes money when it is brought in to the US, and therefore, they aren't evading taxes.

Whether that's true or not is a task for the courts to decide, but considering that there is a long history of the US government not taxing overseas profit until it comes to the USA, I'd say that this is an indicator that the government has, to date, agreed with the corporations on this.

Courts? Why? There is a simple fix:

Since these are felony allegations (criminal not civil) IRS investigators should sit a few of these CFOs down in a cement room and ask: "Does any of this money come back to the US?"

Then the CFO has a few options: 1) lie to a federal agent (not a good plan) 2) plead the 5th (not a good plan) 3) state to a federal officer that none of the money is used, transferred, or used to pay employees of said corporation by proxy.

I would assume these wouldn't go well at all.

When the funds come back to the U.S., Google is taxed on them. But they haven't returned yet. Have you missed all the news stories talking about how many of these companies keep the funds outside the U.S. for this purpose?

Who cares about the taxes returning to the us? They're making money in foreign territories and should pay tax there. For instance here in nz Google reportedly only pays 200k in tax which is obviously outrageously low.

I think you didn't see the rest of the comment chain. The issue that we're discussing is the suggested U.S. government's involvement.

Yes I read it, but its irrelevant.

linkregister

Yes I am well versed in the new stories. The entire point is to move funds out of the country and avoid taxes. They aren't investing in Spain's tech future. They will use this money (stolen from the US people) illegally to: produce products overseas by proxy, perform HR functions by proxy, marketing by proxy, etc. All these products/services are then sold under the company and for more US profit.

I agree that Spain, EU Parliament, and the European Council should enact meaningful legislation and trade agreements to mitigate this tax loophole.

The crux of my argument is that you won't find a U.S. felony here, no matter how bad you want it.

Or point to the accounts that live outside of the USA, and say that the money is kept outside of the USA to legally avoid taxes.