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View Diary: U.S. Trade Deficit Largely Due to "Intra-Firm" Trade (59 comments)

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  •  I remember hearing that much of this (2+ / 0-)
    Recommended by:
    BusyinCA, PrahaPartizan

    is really nothing more that transfers of revenue to avoid taxes. The scam goes like this: ABC Co. forms a Bermuda or Cayman Island or Luxemburg subsidiary and transfers of sells their trade marks and other intellectual property. Then they pay themselves royalties, but the royalties being paid to a foreign subsidiary, they are an expense for tax purposes in the US, and they are nontaxable in the country where they corporations set up the scam. So basically, they can adjust their licensing fees negate all of their domestic profits, even if they are a highly profitable enterprise. Now, of course, they're scheming for an amnesty so they can repatriate all that tax free money and close the circle. Sweet deal - - - for them and their crony pols.    

    •  Personal Experience of the Scam (1+ / 0-)
      Recommended by:
      Old Surgeon

      A bazillion years ago I was involved in a power generation project which was being exported to a foreign nation.  One of the components which was to be included in that project was manufactured in the US and was being financed under a very attractive US government financing program.  When the time came to actually contract for the manufacture of the component, the supplier, who was HQd across the Hudson River from where my offices were located and whose manufacturing facility was elsewhere in the US, presented us with a sales contract prepared by their Swiss subsidiary which would be dealing through their Bermuda affiliate.  Basically, most of the profit being generated from the sale using US government funds was going to be hidden overseas.  This happened about forty years ago, so it's been going on for a long time.

      "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

      by PrahaPartizan on Fri Aug 10, 2012 at 02:06:21 PM PDT

      [ Parent ]

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