What is involved in the closure of tax gaps?

Final tax gaps usually include one of the two government approaches. First, the government may start actively recovering rules in the Tax Act, which has been ignored in the past to increase revenue. Secondly, it can adopt new legislation that results in the conclusion of tax gaps that can be made of various former government incentives such as subsidies, credits and deductions that are no longer considered useful. The conclusion of the tax gap may also include the removal of the methods of avoidance from investment income, where it was previously categorized as a postponed income, or by disableing tax relief for divisional trade losses or overseas investments, where the total corporation profits have been positive in the last year.

Since the Tax Act has become increasingly complex, the provisions on the Tax Act for a special case ofynzative to prevent the formation of a large tax limiter for corporations or individuals. It is estimated that in the United States the closure of tax gaps in its entirety could bring an additional $ 1,000,000,000,000,000,000 (USD) in income annually since 2011. A significant part of this lost income is from the main internationally recognized US corporations. One important example of a corporation that earned $ 6,320,000,000 in the annual profit of paid taxes for only 7%, ie $ 445,000,000, this profit for the fiscal year 2011. He did this by directing most of his sales earnings through tax haven in countries such as Ireland, Singapore and Portoriko to reduce their federal tax tax Liabilities in the US.

Using overseas investment and earnings as furneling processes to prevent tax payments are called double Irish and Dutch sandwich schemes that are strongly used by the main technology companies and estimated to cost $ 60,000 in the annual income since 2011.Angle gaps, such as this, requires the creation of intensive new tax legislation and its long -term recovery. The same technology companies owed average taxes on legal entities more than 30% in 2006 and managed to use these tax gaps in the law to reduce to less than 10% without violating the law.

Another important approach to the closure of tax gaps may be a thorough exploration of existing tax laws and their weaknesses that the government has largely ignored in the past. In the US Massachusetts Governor Mitt Romney did exactly as soon as he was elected to office. Within a few months of receipt of the Governor in 2003, Romney employees examined the tax law on income from state income by $ 110,000,000 in legal persons. The closing of tax gaps in the next three years in the state brought hundreds of millions of dollars in additional income.

One important example of how Massachusetts has reached BY goes by banks that have reduced the tax owed by the state, by investing their profits in funds of investment in real estate, which were of laws basically no taxation. In parallel with what technology companies did with overseas branches to avoid federal tax, state banks legally avoided taxes by claiming that real estate confidence was part of a normal banking business. In fact, these "investments" were in the form of a tax hiding that banks used as long as the Governor Romney revised state law to disable this practice.