U.S.-based Swift Solutions, Inc. has manufacturing facilities in Poland and New Zealand. Each facility earns the equivalent of $10 million in foreign-source income before tax. Corporate income taxes are 19 percent in Poland and 28 percent in New Zealand. Dividend withholding taxes are 19 percent in Poland and 30 percent in New Zealand.

a. Use Exhibit 15.4 to calculate the overall U.S. tax liability (or excess FTC) of Swift Solutions. Assume 100 percent of foreign-source earnings from each subsidiary is paid as a dividend to the U.S. parent.

b. Suppose Swift Solutions is able to shift operations so that pretax income is $20 million in Poland and zero in New Zealand. What is the U.S. tax liability (or excess FTC) under this scenario?

c. Suppose Swift Solutions is able to shift operations so that pretax income is $20 million in New Zealand and zero in Poland. What is the U.S. tax liability (or excess FTC) under this scenario?

d. Is Swift Solutions likely to be able to earn the same pretax return in Poland as in New Zealand based on the same effort? Why or why not?