Corporations use all sorts of complex stratagems to move their profits overseas, and thus escape the U.S. income tax.
T.R. ReidThe Value-Added Tax, a sales tax that applies at every level of business transactions, is an easy tax for governments to collect, and a hard tax to evade.
T.R. ReidIf you ask any economist, they'll tell you all the mortgage interest deduction does is raise the price of the house. So a couple is out looking at the house, they say, "Oh, we love this house, but we couldn't make the monthly payment." And the realtor says, "Yeah, but you're going to get a tax break." So people pay more than they would otherwise. You take a loss even though you're making a gain.
T.R. ReidThe higher the rate, the more interest there is in avoiding the tax. Either you move or you shift your profits overseas, as American corporations have proven very good at doing.
T.R. Reid