U.S. companies use Ireland to save on tax

It has been going on for several years. U.S. corporations have subsidiaries in Ireland and report big profits there. The basic tax rate for corporations in Ireland is only 12.5 percent, while the U.S. corporation maximum tax rate is 35 percent.

A recent analysis by Reuters shows more than 40 percent of the biggest corporations (top 500) have registered subsidiaries in Ireland.

Apple is reported to have paid little or no tax on tens of billions of dollars in profits that were channeled through Ireland.

Western Union has 11 of its 12 subsidiaries registered in Ireland, occupying a single floor of a three storey building in Dublin. Western Union says it made about 92% of the income outside the United States in 2012, even though only 20% of its staff work in Ireland. That does not make sense.

Boston Scientific, a medical device manufacturer is reported to have paid on $60,000,000 tax on profits of $1,400,000,000, or about 4% tax rate.

Some of the tax savings in Ireland are because of special grants. Bristol-Myers Squibb gets grants from Ireland and Puerto Rico that save tax and are not scheduled to expire until 2023. Ireland has a big unemployment rate (over 13%). It is reported that about 700 U.S. firms employ about 115,000 of the 1,800,000 Ireland residents who have kept their jobs.

Stanley Black & Decker employs 58 people at its 15 Irish-registered subsidiaries.

The requests have been made for years to lower U.S. corporation income tax rates from 35% to something lower that competes with Ireland and other countries. Our Congress has not taken any action to lower U.S. corporation income tax rates.

It is past time for U.S. tax rates to be lowered to rates that are competitive to Ireland and other countries. The U.S. income tax rules for corporations are complicated with special targeted tax deductions and credits. Many U.S. corporations do not pay the maximum rate of 35% because of the various special rules and laws.

That just makes a lot of jobs for CPAs and law firms. It does not help get more of the jobs back to the U.S. and it does not result in reasonable tax revenues being paid to the U.S. either.

What is the problem with Congress? Do they only want to be re-elected? I don’t understand why this problem is not a priority for Congress. Maybe we all need to contact our members of Congress and urge them to work on this problem, now?

Did you hear? “Nothing increases your golf score like witnesses.”

John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Co. CPAs.