MGMT E-1640 Tax Issues in a Global Economy

In a global economy, business owners and managers need to understand basic concepts of taxation, both domestically and internationally. Large, emerging, and even small companies must be able to comply with and plan in an increasingly complicated world of taxation. As businesses compete on a multistate and international basis, they find that the compliance issues and planning opportunities are virtually endless as they attempt to minimize their overall tax burden. In this course we review the relationships between domestic and international taxation including the use of tax treaties adopted by more than 70 countries. These treaties have allowed some of the largest companies in the world to pay relatively little in taxes. It has been reported that Apple, the largest company in the world, paid less than 10 percent combined tax on income of $34 billion. Typical combined federal, state, and international tax rates can exceed 40 percent. Similarly, General Electric has paid less than 2.3 percent in tax for the last decade. In 2010, GE reported a profit of $14 billion and actually received a refund from the government of $3.2 billion. The planning technique used in Apple's case was titled "Double Irish with a Dutch Sandwich" which uses various offshore tax havens and other perfectly legal methods to reduce or defer taxes. We examine the emerging sales and state and local issues and planning opportunities in multistate, international taxation, resulting from online and internet companies such as Amazon. We also monitor current and prospective tax developments. Prerequisite: financial accounting or related experience. (4 credits)