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The Global Con Hidden in Trump’s Tax Reform Law, Revealed

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The Global Con Hidden in Trump’s Tax Reform Law, Revealed

Why would any multinational corporation pay the new 21 percent rate when it could use the new “global minimum” loophole to pay half of that?

By Brad Setser

Mr. Setser is a senior fellow at the Council on Foreign Relations.

  • Feb. 6, 2019

President Trump after signing the tax bill in 2017.CreditDoug Mills/The New York Times
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President Trump after signing the tax bill in 2017.CreditCreditDoug Mills/The New York Times
Last night, President Trump reserved a few minutes of his State of the Union address to praise his tax reform law, which turned a year old last month. To promote its passage, Mr. Trump and his congressional allies promised Americans that drastically lowered corporate tax rates would bring home large sums of capital that had been stashed overseas and finance a surge of
domestic investment.

“For too long, our tax code has incentivized companies to leave our country in search of lower tax rates,” he said, pitching voters in the fall of 2017. “My administration rejects the offshoring model, and we have embraced a brand-new model. It’s called the American model.”

The White House argued they wanted a system that “encourages companies to stay in America, grow in America, spend in America, and hire in America.” Yet the bill he signed into law includes a sweetheart deal that allows companies that shift their profits abroad to pay tax at a rate well below the already-reduced corporate income tax — an incentive shift that completely contradicts his stated goal.

Why would any multinational corporation pay America’s 21 percent tax rate when it could pay the new “global minimum” rate of 10.5 percent on profits shifted...

https://www.nytimes.com/2019/02/06/...5AAZjbK0vmuNHhhtF7-TOW5KpOT-SQYqKjj4n75Rs5YLU
 
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