Whereas Google, Apple, GE and many other large corporations pay little to no taxes using offshore tax havens, transfer pricing and foreign offshore subsidiaries
We, the people, wish to flatten the tax system by withholding the Backup tax minus the corporate tax rate for all FDAP payments made by such a corporation
Thus, dividends will only be taxed at a lower rate to avoid double taxation. When corporations do not pay any tax, receivers of interest and dividends should therefore pay the difference, since the profits have not been taxed fully under the US tax system
Custodial banks (e.g. BoNY Mellon) will maintain the effective tax rate for each corporation and subtract that percentage from the Backup tax rate of 28% to determine what tax rate should apply prior to applying treaty rates