Even A Good Citizen Doesn't Have To Pay Unnecessary Tax

Some tax related issue has been recently raised in the U.S.  The issue is that large multinational corporations, such as Google and Apple, are not paying enough tax in the U.S. by not repatriating their income back to the U.S. among possible other tax planning ideas.

To the extent that I understand the issue properly, I'm not quite sure what's going wrong with Google and Apple's tax sensitive attitudes, assuming that they are just trying to save tax in compliance with tax laws, but are not avoiding tax by breaking laws.

The U.S. tax authorities and government might not be happy with the tax planning ideas Google and Apple are conducting.  However, corporation is also a citizen under the laws and has a right to protect its property, i.e. money.  If the government needs to invade the citizen's property, that should be justified by laws.  In other words, as far as the citizen is in compliance with laws, the citizen should not be taxed on its property.

As can be seen in the above tax issues of Google and Apple, U.S. corporations are generally very tax sensitive.  Many of their tax plannings are very aggressive.  It is not unusual that their business plan is motivated by tax, and they even move their business headquarters to low tax jurisdictions.  As a result, U.S. corp's effective tax rates (i.e. ratio of tax paid over their earning) are generally low, maybe around 10 to 20%, as seen in their financial statements.

By contrast, Japanese companies' mindset for tax is very different from the U.S. companies'.  Many Japanese companies respect their obligation to pay tax very much, rather than protecting their money.  Japanese companies are usually not tax oriented.  Although they try hard to comply with tax filing and payment, they don't initiate aggressive tax planning.  Accordingly, Japanese companies' effective tax rates are usually around 40%, which is much higher than U.S. companies (i.e. 10 to 20% as in the above).  These Japanese companies, who are paying decent amount of tax even if they might not have to pay that much, should be viewed as a good citizen by the Japanese government, but their pure compliance with tax laws without effective tax planning is not necessarily welcomed by their investors, since the companies' money is their investors' money, and those investors would possibly like to protect their money by taking more tax saving ideas.

I think a citizen, whether it's natural or corporate, should insist on protecting its money from being taxed as far as complying with rules.

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