North Korea versus Sony isn’t just about computer hacking or the nature of the next world war. It is also about taxes.
Sony Kabushiki Kaisha is headquartered and domiciled in Japan. Its computer servers that were hacked are located in Europe.
We should have never very publicly described, then defended, this as an attack on the U.S.
When Hollywood stars began complaining about their emails being stolen and published, the FBI should have referred the company and its employees to the Criminal Investigation Bureau of the Japanese National Police Agency.
Sony does employ Americans and operate a number of wholly-owned US subsidiaries, but the company generates only 17 percent of its revenue in this country and pays negligible US income taxes, if any.
If Sony wants the protection of the U.S. government, it needs to be a U.S. citizen. The same can be said of Burger King and other companies that move their tax address out of the U.S. via a transaction known as a tax inversion.
In most parts of the world, countries tax a company’s profits that it earns in that country. The U.S., however, taxes all earnings of U.S.-based businesses, regardless of the country in which they are earned.
It is an antiquated, onerous and terribly inefficient corporate tax system. But it is the one we have. It is not, however, as the President has suggested, “unpatriotic” for businesses to organize or reorganize in such a way that it minimizes their tax liability. It is just common sense.
But moving overseas should come with a price. If you want to enjoy the rights, privileges and protections of being a U.S. citizen, don’t move to Canada.
And if you are a Japanese company, don’t expect the U.S. to fight your battles. The FBI is not the world’s IT department.
When companies consider moving overseas for tax purposes, our government shouldn’t threaten them with newly contrived revenue assessments. Instead, the U.S. should create an environment that causes businesses to want to be here.
It was fool-hearted to so publicly offer a Japanese company the rights and protections of U.S. citizenship simply because it employs a lot of Americans, even if some of them happen to be high-profile, highly-embarrassed political supporters.
Our government has a covenant obligation to protect her citizens who are attending movies, just like it protects people at Neyland Stadium, West Town Mall and in their own homes. But we owe Sony’s intellectual assets no similar protection.
Although my office in is downtown Knoxville, I choose to live outside the city limits where, among other things, I enjoy a much lower overall property tax bill. I shouldn’t expect the Knoxville Fire Department to fight a fire at my house. If I want the services and protections offered in a certain jurisdiction, I need to pay for them.
So should Sony.