Protesters and politicians alike have recently been noticing how little American corporations pay in taxes. (G.E. famously made $14 billion in worldwide profit last year without paying anything to the federal government.) Above, diagrams of some famous IRS-dodging strategies.
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PRE (Permanently Reinvested Earnings)
(1) A U.S. company gives a foreign subsidiary the license to use its intellectual property (patents, designs, etc.) to make money overseas. (2) This unit collects all foreign earnings. (3) Those earnings, subject only to (lower) foreign tax rates, can be reinvested anywhere in the world; the only place they can’t go is back to the U.S. company as cash profits.