I'm confused. If I cut off my big toe and mail it to a different state, can I claim that I should only pay taxes in that state? Why, then, can a company move a small and inconsequential part of itself to a different jurisdiction, then be taxed under that other jurisdiction?

Companies moving out entirely would be analogous to people moving. Companies moving out on paper while continuing to do business in the same location is analogous to tax evasion.

If the tax code says that the location of your right big toe decides where your entire body pays tax, regardless of where other parts of that body is located (immediately adjacent to the toe or scattered across the world), then yes, where the big toe is, that's where you pay tax.

The analogy is more like that the location of you navel decides where you pay tax, and you discover that if you shift your weight around a little, your navel ends op on the other side of the line.

The problem is that the tax code fundamentally assumes that businesses are reasonably local and contained operations (analogous to a single body) and only deals with sprawling multinationals through monkey patching in an environment where policies appearing to benefit big businesses isn't exactly a big vote-grabber.

I think the proper analogy would be cutting off your head and mailing it to the other state. But that would be a silly analogy wouldn't it?

An analogy that might work is to move over the county line to reduce property taxes but continue to travel back into the original county to work or shop. Even then, you would still be paying some form of taxes to the original county; much like a company moving countries is not going to eliminate ALL tax liabilities.

By the way, if it is deemed legal then it is not tax evasion.

> What companies are doing is nothing more than citizens within the US can and choose to do, they move to places where their tax burden is less.

Wherever you, as an individual, move in the world, you are still supposed to pay US taxes. The US is one of the very few countries in the world to do this. The number of people renouncing their US citizenship to get away from this is on the rise.

A friend at work who is a US citizen and has been living in Canada for ~15 years just found out he owes back taxes for those 15 years to the USA.

He's been told that as of July 1 2014, renouncing US citizenship will have no impact, he still has to pay back taxes, and forward taxes.

I'm doing some googling now, and this might be it, or at least related, I'm not certain

http://www.cbc.ca/news/canada/fatca-facts-what-canadians-nee...

http://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_...

It would be really awesome if you(or your friend) had a blog to keep us up-to-date on how this turns out. I can't imagine what 15 years(plus penalties?) in back taxes looks like. I would consider just disappearing.

Assuming she/he is willing to share that personal info.

It's a huge amount of money, as he's basically been working insane overtime in IT for the last 15 years.

Disappearing is not really an option - we're very close to the US border and going there on weekends is one of the major things we do, also, Canada will expedite to the US, and I wouldn't be surprised if they track him down, as we're talking many hundreds of thousands of dollars.

> What companies are doing is nothing more than citizens within the US can and choose to do, they move to places where their tax burden is less.

Note that is one thing US citizens cannot do, if you mean a different country versus a different state. The US is one of relatively few countries that tax citizens (and green card holders) no matter where you choose to live, or where your income is earned. (There can be some allowance for taxes already paid.) You can of course give up your citizenship, but good luck getting back into the country.

The amusing thing is that corporations are legally considered people. Why aren't these now foreign companies forced to jump through similar hoops foreigners are, and also subject to the same restrictions on applying money to the political process?

The Administration will probably just Executive Order their way into a "solution".