In the scenario you paint, the corporate income tax in China is actually lower. If you moved your headquarters to China but the income the corporation generates is not connected to that office, ie your sales are still in North America, then the corporate tax rate is actually only 20%. Move some factories there and then you will pay 25%.
But in reality you don't need to move headquarters around to get favourable tax treatment. The corporation I work for is headquartered in Switzerland, Pfizer is one of our main competitors and they are headquartered in the US. They use various means of avoiding tax though, and don't even come close to paying the full 35%.
Fair enough... One of the trends in the USA right now (and probably Canada) is that Domestic companies with international operations are setting up a subsidiary in the (offshore) nation of operations. In those cases where the corp tax rates are lower, the subsidiary is not flowing the revenues back to the parent in an effort to pay the lower tax rate in the nation of origin (of the revenues). Those monies are likely deployed in that general jurisdiction and retained as profit there.
The parent company basically 'owns' that money, but by virtue of not transferring it to HQ, they are sheltered from the higher US (or CDN) tax rates.
As far as capital losses are concerned - it is still a loss on the after tax capital required to get into the investment or start the company, etc.. being able to take advantage of a capital loss doesn't turn a net loss into a net profit.. It's still a loss.
At the end of the day the money is there but being wasted on stupid, pork-barrel sh*t and 'fact-finding' junkets and caucus meetings at Langara lodge etc. If we could hold these stupid bast*rds accountable for unwise and unethical use of our taxes the money might wind up where it should funding something useful like education.
I couldn't agree more
Yeah, I've seen this one before. It was bogus then and it's bogus now. It exaggerates the amount paid by the top 3 and doesn't count any sales or value added taxes paid by the poor. It doesn't count for any offshore investments or capital losses or the myriad of other deductions available to the wealthiest.
Sales taxes and VAT aren't taxes exclusive to the poor, but the graduated, progressive taxes do become exclusive as you climb the income ladder.
As far as offshore investments are concerned, that's a complex area, but suffice to say, the original capital that may comprise the offshore account are, again, after-tax dollars. Further, those offshore monies must remain offshore - you repatriate those funds and you stand a strong probability of having them taxed (personal taxes that is).
Bear in mind that there are numerous nations that Canada has a tax treaty with, so it's not quite as easy as setting up a corp mailing address in the Caymans, filing your taxes there and later transferring the money to yourself in Canada without having a tax bill on it.
At best it is an oversimplification that doesn't consider all factors, at worst it is a complete fabrication intended to mislead.
In it's most base form, the example is accurate.. Replace 'beer' with medicare and it's bang-on.