By David Cay Johnston
The author is a Reuters columnist. The opinions expressed are his own.
From the way Washington politicians in both parties tell it, you may well think that multinational companies favor low-tax jurisdictions when investing overseas. They don’t.
The multinationals prefer investing in high-tax jurisdictions because it so happens that is where they can earn the highest returns.
Multinational companies then reduce or eliminate those seemingly high taxes by using simple, widely used devices to take profits in low-tax and no-tax jurisdictions.
Such practices create “stateless income,” in the words of Edward Kleinbard, whose new scholarship on corporate taxation deserves our attention.