Sigh.... is 180 Billion the latest made up number? Let’s leave aside the hysterical numbers with absolutely no credible methodology for a moment and just agree on “a whole bunch of $” for the sake of discussion. Now, let's get a few points straight. -A reasonable definition of "tax haven" is a country, which through legislation on legal tax planning or reduced legislates rates provides a lower net tax burden for an individual or MNC taxpayer than another country. Under this definition, the US is clearly a tax haven in a wide variety of situations such as the tax-free non-resident accounts, delaware corporations, etc. etc. etc. The US is not alone in that almost without exception, every country in the entire developed world can easily be defined as a "tax haven”; -Corporate or individual taxpayers do not pay taxes on gross revenues. They pay taxes on profits (ie gross revenues MINUS allowable expenses and deductions). Therefore an argument that begins with quoting gross revenues should be instantly dismissed; -The premise of the article and PIRG’s “report” is that all this money somehow belongs to a particular jurisdiction such as the US in the form of unpaid tax revenues. This is a common misconception, as it ties into the "all of our problems would be solved, it we could just recover this "hidden stolen treasure” myth, which is pedalled by politicians at all ends of the political spectrum. Unfortunately, the reality is that whatever the actual number, “a whole bunch of $" is comprised of the following: 1) Proceeds of crime or tax evasion; 2) Net after-tax monies which for a wide variety of business reasons are held in particular accounts (i.e. the tax already paid) 3) Monies which are legally not subject to tax -With regards to the proceeds of crime and tax evasion, the combination of whistleblowers, exchange of information agreements, FATCA, Qualified Intermediary Regime etc. is making this more and more difficult to use domestic or international accounts to hide. How much tax evasion and proceeds of crime there is about to be uncovered is a matter of conjecture. However you look at it, the repatriation of these monies is a single revenue event rather than an on-going tax revenue stream; -The later two sources of monies held in “tax havens” is in no way owed to any taxing jurisdiction, let alone the US. -Another complaint that I often hear is that somehow it is “unethical” for these monies to be held in the form of US T-Bills. This argument is silly on its face. First, if it is not unpaid tax, then it is up to the owner to hold it in whatever currency and whatever form they wish. If they chose to hold US T-Bills, they are doing the US a HUGE favour by providing further confidence in this US security. With these facts on the table for all, we can now have a productive discussion. At the outset, it is worth understanding some history and background. The current system of tax treaties and international structuring arose from a desire by many national governments to try and maximize the tax revenue they collect. They did this by recognizing that there are constantly situations where an international corporation may be obligated to pay tax to several jurisdictions on the same revenue (aka double taxation). Of course, this would result in no net revenue and the corporation going bankrupt. Therefore in order to attract the good or service to their jurisdiction; try to get as much tax revenue as possible; and try to encourage the corporation to set up some of its physical structure and work force in their jurisdictions, countries like the US, UK and Ireland set up tax treaties between themselves and other countries. It is key to understanding this underlying motivation for the current system. This system arose not out of some noble desire to relieve taxpayers of the "unfairness" of double taxation or even at the bequest of the lobbyists of those taxpayers. It came out of a logical self-interest of various governments. With this background in mind, let's look at Microsoft, Twitter, Apple, Google and Starbucks (which are all under fire in the international media for their tax planning). -Many US politicians and citizens want these companies to pay US tax on their WORLDWIDE income, including income earned from foreign customers. They argue that while this may not be legally correct, it is MORALLY correct because all these companies were a) Founded, IPOed and have their headquarters in the US; AND b) The citizens of the US are suffering in a financial downturn and "deserve" this money; -Many foreign politicians and citizens (like the UK) want these companies to pay more tax on the revenue generated from customers in their country. They argue that while this may not be legally correct, it is MORALLY correct because a) The company is deriving income from local individuals and corporations; AND b) The citizens of these countries are suffering in a financial downturn and "deserve" this money; -All of these companies want to maximize their net revenues ("gross revenues" minus "expenses including tax" equals "net revenue"). Each company used the tax treaty network and international structuring regime to minimize their global tax burden. As part of this structure they may have to set up operations in places like Ireland; or assigned intellectual property rights to places like the Netherlands. However there are important differences between these companies; -Starbucks needs to respond to this "Moral but not legal" obligation demand because a) It has physical facilities which could be picketed or damaged reducing sales; and b) There are many competitors who could easily service customer needs and decrease gross revenues. As a result, it is logical that Starbucks may consider paying more tax in the foreign country or the US than legally obligated in order to maintain gross revenues and thereby maximize net revenue. In fact they already did volunteer to pay more than their legal tax requirements to the UK government last year and have recently moved their European headquarters to London for exactly this reason. -Twitter and Google are different in that a) They do not have or need physical facilities in a given country to deliver its service; b) You can't picket everyone's smartphone, tablet and computer to ensure that there is significant boycotting of their services; and c) With all due respect to other search engines, Google is not really realistically worried today about losing customers to its competitors. Same thing with Twitter's lock on "tweets". Therefore, the current controversy is unlikely to significantly reduce people from using their products and services. As a result, it is logical that they will not consider paying more tax anywhere than legally obligated; -Apple and Microsoft derive gross revenues from various products (hardware and software) which has competitors. Some of the sales of their products and services derive from physical retail outlets and some does not. The big question is whether their products (with their hardware and software integrated) is unique enough to avoid a drop in revenues. Obviously, Mr. Cook has decided that for the time being Apple will NOT pay more than legally obligated in taxes. I am sure the people at Apple are watching their sales very closely to determine if consumer anger with their tax planning is having any significant effect on revenues. In summary, Starbucks sells a standard physical commodity which is readily available from other competitors and is clearly subject to pressure. "Search" and "Tweeting" are not a standard physical commodities today and whether through perception or reality, both are far and away market leaders. As a result, neither Twitter or Google are motivated by self interest to pay more tax to maintain gross revenues. Where Apple or Microsoft considers themselves (closer to a standard replaceable commodity or a unique product) in the long run will determine where they will respond and volunteer to pay more tax anywhere than they are legally obligated. It is also worth understanding that revising the current international legal tax planning regime for individuals and corporations is not simple. First it requires that each country think about all of the possible/ probable reactions of corporations and individuals to any changes that come into being. Increasing a tax rate or taxable amount could result in the individual or corporation moving all or part of its operations/holdings outside of that jurisdiction. This means that not only is the anticipated additional tax revenue never materializing but jobs, VAT, and other economic activity associated with that taxpayer also disappear. Second, as explained above, the current matrix of tax treaties and domestic laws was developed over the better part of a century. Domestic tax policy was put in place by local politicians acting in what they thought was the best interest of that country. Tax treaties were negotiated, signed, updated when both countries perceived a win-win for each of their countries. The major problem in trying to achieve achieve changes that will increase tax revenue (that groups like the OECD are calling for) is that you need to change not only domestic rules but also the intertwining tax treaty network for each and every country in the world. Given the "Prisoner's Dilemma", it is HIGHLY unlikely that we will ever see a global "tax level playing field". Each country continually claims special circumstances or financial emergencies as to why they are not immediately changing current policies. In addition, as explained above taxing regimes do not have the same "leverage" over all corporations or individuals. With "global citizens" (i.e. Golden Geese who do not need to be in the country of their birth or naturalization to make and maintain their wealth/income); truly “Multinational Corporations” who can operate from anywhere and who derive revenue everywhere; cloud computing; and the pending revolution in 3D printers (which will turn more current tangible goods into intangible services/programs delivered on-line direct to the consumer), you will see more and more taxpayers who are more like Google than Starbucks.