In a new tax plan that calls for slashing business rates, President Trump and congressional Republicans proposed a little-known tax that may hit companies like Apple and Pfizer.
It was contained in one sentence. It reads, “To prevent companies from shifting profits to tax havens, the framework includes rules to protect the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations.”
The rate and formula were left out, but this one sentence will cost multinational companies billions of dollars.
Ken Kies of Federal Policy Group, whose clients include General Electric Co. and Microsoft Corp. said that proposing a new tax on U.S. companies’ foreign profits “is appalling.”
He continued, “The whole point of this tax reform was to make U.S. corporations more competitive. It’s going to do the opposite.”
it is not all bad for multinational companies, although. The framework of the plan would allow them to bring back to the U.S. years’ worth of foreign earnings after paying a low tax rate — perhaps 10 percent –on them.
Bloomberg News reported that multiple tax experts reviewed the plan and concluded that multinationals will be able to able to continue using sophisticated tax-winnowing techniques and tax havens.
While they may still face billions of dollars in new tax payments, it won’t be as bad as it could have been for them.
What are your thoughts? Do you think that this is a good idea from Trump or not?
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Credit: Chicago Tribune