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Principles of finance a la shmoop offshoring for tax benefits hot topic

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[Man and woman arguing] what does that mean well in 2016 what was left of Europe post brexit submitted

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to Apple a tax bill for 15 billion dollars

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well that event shined a light on global tax policy in a way that had never quite [Global Tax Policy speaking into microphone]

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hit the limelight basically Europe claimed that Apple owed them for a

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decade in change of past tax bills.. Apple had created a ton of jobs all over [Apple logo all across Europe]

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Europe and had believed that it was to receive a tax waiver in return for doing

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so well Europe is economically weak and you know fading fast so it is

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desperately trying to cut deals with anyone who will employ its desperate

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socialist masses but there's another side of the story here as well when

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American domiciled corporations do business in other countries they [Plane travels to Europe from USA]

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typically set up a subsidiary corporation there which exists pretty

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independently that corporation has its own set of accounting books and

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maintains its own definitions of profits and it is taxed independently as well so

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hewlett-packard France face a 35% tax for the privilege of operating in France

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it would love to wire home to its Palo Alto California offices to cash profits [Stack of money lands outside HP headquarters]

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it has retained overtime from doing business in France but if it does so the

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American government will tax those profits again so hewlett-packard would

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turn a dollar into about 35 cents really quickly by paying tax twice once to

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France and then once to the good ol US of A well why would Hewelett Packard do

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that yeah wouldn't so it leaves money in France hires French workers and builds a

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tech business offshore outside of America..Fair, not fair, smart politics

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dumb politics smart economics you tell us...[Man looking confused]

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