1000s Of American Jobs Could Be Lost If This…, by Mark Nestman

The problem with the hyper-expansion of international organizations the last few decades is that it’s almost impossible to keep track of all the things they’re doing to “improve” planet earth and its citizens’ lives. Here’s the latest bad idea from the Organisation for Economic Cooperation and Development (OECD), which has had a string of them, from Mark Nestman on a guest post at theburningplatform.com:

Leave it to bureaucrats to decide that while some competition is good, too much is bad. In a nutshell, that’s what the Organisation for Economic Co-operation and Development’s (OECD) ongoing campaign against lower taxes is all about. And now, they’re taking it to a whole new level.

Back in 1998, the OECD’s Committee on Fiscal Affairs (CFA) released a report outlining what it perceived as a dangerous trend: more and more countries were reducing taxes. The OECD called this trend “harmful tax competition.” It was dangerous, according to the OECD, because it had the potential to reduce tax revenues in nations that didn’t wish to engage in tax competition.

To help fight harmful tax competition, the OECD proposed that low-tax countries be forced to cooperate in tax investigations by high-tax countries. It also called for sanctions against jurisdictions engaging in harmful tax competition.

While it hardly seemed possible in 1998 that the OECD would get its way, that’s exactly what happened. Fast forward to 2015, and the OECD’s “global information exchange standard” is nearly in place. The Obama administration gave the effort a big boost by enacting the Foreign Account Tax Compliance Act (FATCA) in 2010, with the end result that more than 60 countries, including several low-tax jurisdictions, have agreed to exchange information on foreign customers in local banks, trust companies, etc., in order to avoid possible sanctions.

However, the OECD is just getting started. It’s a bit like the old saying, “Give an inch and they’ll take a mile.” Its latest campaign is to crack down on a practice it calls “base erosion and profit shifting” (BEPS). Essentially, the “War on BEPS” is designed to prevent companies from routing profits through low-tax countries. The aim is to put a stop to the global erosion in corporate tax rates, which have declined from an average of almost 50% in the early 1980s to 25% today.

For instance, Apple Computer pays tax on its global income at a rate of less than 10%, less than one-third of the top US corporate tax rate (35%). To the bureaucrats at the OECD, that’s simply an intolerable situation.

The BEPS initiative is designed to put an end to this kind of legal tax avoidance. It would force companies to cough up mountains of data on their structure and operations. Based on an analysis of this data, national tax authorities would then apportion corporate taxes based on concepts such as “location of the economic activity” and “value creation.”

The Obama administration, which seems never to reject an idea that could lead to higher tax revenues, eagerly signed on to the BEPS initiative. But in the (unlikely) event that Congress goes along, the US is likely to experience a jobs drain unlike anything it’s ever experienced.

That’s because once BEPS is in place, the only way for US multinational corporations to take advantage of lower tax rates in other countries is to relocate “economic activity” and “value creation” to those countries. Perhaps the most reliable way for a company to demonstrate adherence to these concepts is to move jobs to those countries.

To continue reading: 1000s of American Jobs Could Be Lost

http://www.theburningplatform.com/2015/06/23/1000s-of-american-jobs-could-be-lost-if-this/