The US government sets up a complex corporate tax system under which, unlike most other countries, income earned by US companies overseas is subject to the same rate is income earned domestically. So...
...large US multinational companies develop strategies-all LEGAL within the framework of the existing tax laws-to seek to minimize their tax burdens. So...
...the US Senate conducts an investigation. And blames...
the companies:
WASHINGTON—Microsoft Corp. and Hewlett-Packard Co. used accounting strategies to hold down their U.S. tax bills while shifting profits in and out of the country, according to a Senate subcommittee investigating how multinational companies exploit the intricate U.S. corporate-tax code.
Senate investigators said much of the activity appears to comply with the letter of current tax regulations, though they regard some of the practices used by H-P as potentially abusive and subject to challenge.
Both tech giants said their strategies are legal.
The findings—from one of a series of reports on corporate-tax practices by the Senate Permanent Subcommittee on Investigations—come as Congress prepares for a debate next year on an overhaul of America's business taxes.
It’s always amusing-in a sadly comic way-when the government creates a dysfunctional taxing system and then becomes surprised and angry when companies or individuals work LEGALLY within it to avoid paying more than they LEGALLY have to. Perhaps, just perhaps the problem here is not that Microsoft, HP, and a slew of other US companies and individual taxpayers are investing time and resources (which certainly could be better used elsewhere) to minimize their tax burdens, but rather that the government has created such an unwieldy system in the first place.
