Crumbs like the Trump Ryan tax cuts or actual crumbs?
https://thehill.com/blogs/pundits-b...s-is-holding-us-jobs-hostage-trump-should-not
Tax laws that most people don’t understand are subsidizing U.S.-based multinational corporations. There’s ordinarily no tax on income of foreign subsidiaries until it’s brought back — “repatriated.” That is, until a U.S. corporation physically gets paid, America collects no tax. Multinationals have stashed $2.5 trillion of untaxed income offshore — they’re reluctant to bring that back because they’d have to pay the tax on it.
The solution is “piercing the corporate veil.” Congress routinely “looks through” corporate layers to tax easily shiftable income still owned by foreign subsidiaries. Congress can also look through layers to tax the multinationals’ deferred $2.5 trillion.
Technically, a congressional look-through would tax all the sheltered income of the foreign subsidiaries immediately, via a “deemed dividend”: Congress can “include in gross income” all those untaxed earnings, and they will be immediately taxable. That shuts the shelter down.
At our 35 percent rate, less standard credits for foreign taxes paid, the government would bring in some $718 billion. Those are taxes workers won’t have to pay.
But wait. The multinationals want to bring that money home, but they don’t want to pay their full tax.
If we compromise and cut the 35 percent rate to 10 percent, they would pay $206 billion instead of the $718 billion they owe. They say they’ll use lots of the remaining $2.3 trillion to create jobs. They soothingly call this $512 billion giveaway a repatriation tax “holiday.” It’s really amnesty — and an undeserved windfall.
So corporations are holding that $2.5 trillion hostage. They are politely asking Americans to pay ransom.
Nobody thinks it makes sense to make the multinationals keep that money offshore. But we don’t have to pay a ransom to free that money.
There’s a better way — repatriation with no amnesty windfall.
