Big corporations pay less tax because they operate on a global scale. They will always structure themselves to maximise returns while minimising tax.
Instead of wasting money investigating them the smarter approach would be to lower taxes, especially corporate tax, to a point where they will base their operations here. The benefits to the economy as a whole would be massive. This would then flow on to the rest of the community.
It is a bizarre concept for most people to grasp but you can actually increase government revenue by decreasing taxes.
In principle, yes. In practice, it's a lot more complicated. If the reduction in corp. tax rates does indeed have an effect on the 'base' of operations, it will be a delayed effect, until which you there will be significantly lower tax collections (obviously offset partly by the reduction in tax credits passed on to resident shareholders). Transfer pricing effects may kick in a bit sooner. For firms that would have to actually change their real operations to capture the lower tax rate (as opposed to service / software firms), they'll need convincing that the long-run tax rate will stay low.
And, all of this assumes that the countries where these cash cows are currently located will not respond to threat of losing their revenue by reducing their own taxes or providing other inducements to stay where they are.
And of course, there are other reasons why some firms base themselves or their SPVs elsewhere (e.g. lack of disclosure requirements).
So, while it sounds simple.....and it might work, significantly cutting the corp. tax rate comes with some significant downside risk.
And maximising returns doesn't always mean minimising tax (that's easy....don't earn anything). If your tax minimisation strategies affect your core operations detrimentally (i.e. through all the non-tax costs of actually doing part of your business in location X) you lose. After all, why is every firm in the world not based in the lowest tax regimes? The top marginal US corporate tax rate is higher than ours....plenty of firms are still based there.
