Originally Posted by Frank777
So why are they taxing success abroad?
Local US businesses are expected to pay corporation tax at 35%. If a US company is equally profitable outside the US but manages to circumvent taxation, they do better than the local company, which is an incentive to operate more outside the US than inside and they get an advantage in profit growth. Taxation is often seen as big business vs government but the rates have to be level to make it fair for small businesses. If Amazon pays 5% tax on half their earnings outside the US and 25% on the other half inside, their effective tax rate would be 15%. A small, exclusively local US company selling books might pay 30-35%.
It's only coming out of their profits so it's not going to affect their product markup but it makes it easier for big businesses to grow faster than small ones as they can invest more profit in growth and the rates compound over the years. If you get to keep 85% of your profits and your competitor only gets to keep 65%, you have 30% more (85/65 = 1.3) investible profit every year. That 30% might mean one business can afford a more prominent store with more foot traffic or open more stores, hire more staff, buy more inventory at a better discount.
It's anti-competitive to have larger companies paying lower rates of taxation. The advantage should always be to the small businesses to allow them to grow because the economy thrives on competition. It is ironic how some of the same people who promote competition and free markets as the ideal also promote monopolization of business and low tax rates for the wealthiest people and companies and prefer measures that keep poor people poor. Upwards mobility is a key element of competition and it requires fast asset growth for people at the bottom with slow asset growth for people at the top.
Having a credit system for repatriation means that if a small local US business pays 35% tax, an international company paying 5% outside has to pay 30% repatriation tax and it levels the taxation between the two businesses.