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Comment by jeffdn | Hacker News Reader

US companies do have to pay taxes on overseas profits, which is why they so often have subsidiaries based overseas. Those entities do not have to pay those taxes.

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It's a distinction without a difference.

A regular US person gets a US tax credit for taxes paid to foreign governments. But if that's less than they would've paid to Uncle Sam, they still have to pay the difference here.

That's not true for these overseas subsidiaries. That, as you said, is a major reason these subsidiaries even exist (I'm sure local laws also require them in many cases, but still).

The subsidiaries will always exist - most countries require an employer to be a bona fide local legal entity of the right kind; e.g. an American company cannot have an Italian employee; they can have a self-employee Italian contractor, but not an employee - and the laws of “who is an employee” aren’t that simple (even in the US, as you can see in the case of Uber)

And their existence guarantees that tax burden will be optimized globally, rather than locally - the nontrivial price of setting up and running a subsidiary has been paid, so of course it will be used to get benefits as well.

I think I already acknowledged that local regulations might require a local subsidiary. It's the different tax regime for these subsidiaries (i.e. there's no "pay Uncle Sam the difference between the local corporate tax rate and the US corporate tax rate") vs for individuals, that I'm objecting to.

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