How the US corperate tax effects international business Essay

How the US corperate tax effects international business - Essay Example The United Kingdom corporations can export its products to the United States marketplace. German corporations can sell products and services to the Saudi Arabian marketplace. The Canada corporations can sell products to the current and future customers in California or New York. The United States corporations may import raw materials from China. The United States corporations can convert the imported raw materials into a new saleable product. The United States corporations can sell the new saleable products to two markets. The first market is the local United States marketplace, and the second market is the international marketplace. All countries form part of the United States companies’ international business environment. Consequently, importing countries pay tariffs and duties for the imported goods. In the United States, Section 482 of the United States Tax Code shows the different importing liabilities (Paul 239). Further, the United States corporate tax affects internati onal business. With higher tax rates, there is lesser cash inflow percentages applied to selling the United States companies’ products in the global marketplace. ... With the tax rate at 15 percent, the United States corporations can only allocate 85 percent of the total annual taxable income to producing and selling the companies’ products and services in the global marketplace (Whittenburg and Altus (2010) 35). Higher United States taxes discourage imports into the United States market With the high tax rates, companies located in other countries may be discouraged from selling their products in the United States market. Some corporations located in United Kingdom will prefer to sell their products locally because the local corporate tax rate (30 percent) is lower than the United States corporate tax rate (39 percent), reducing United States imports. Likewise, several corporations located in Canada will prefer to sell their goods within Canada because the local corporate tax rate (36 percent) is lower than the United States corporate tax rate (39 percent), lessening United States imports. Some corporations located in Ireland are persuade d to sell their products within Ireland because exporting their products into the United States marketplace with unfavorably higher 39 percent corporate tax profits is less profitable (Whittenburg and Altus (2010) 35). With higher tax rates, the exporting countries will receive lesser after tax cash inflows from selling their products current to future customers in the United States (Whittenburg and Altus (2010) 453). Tax rate adjustments will increase United States imports To increase the United States imports, the United States government must institute better tax rates. The United States government must lower the United States tax rates to more allowable levels. The United States government can lower the tax rates to a figure that will be near to the 30 tax rate level. This