Thatzwhy (Buffalo and Bangalore Edition)

May 30, 2009

The President of the United States, Mr Obama, recently announced that he would eliminate a notorious tax law loophole that rewarded companies for creating jobs in Bangalore and punished them for doing so in Buffalo. American corporations will no longer be able to get away with not paying tax on their income from foreign operations!

Unfortunately it turns out that the Canadians are determined to foil his plans. Toronto and Calgary have the lowest tax rates in G-7 countries, and American companies are expected reincorporate and shift their head offices over there. In effect, American companies will turn themselves into foreign subsidiaries of Canadian ones.

There should be strong regulations to prevent American companies from reincorporating themselves in other countries to run away from strong regulations.