The tax break that the Trump administration has already tentatively proposed on $2.6 trillion in corporate profits being held offshore, a key piece in Washington's intricate tax reform puzzle, is being pushed to be extended by major U.S. multinationals.
Lobbyists for technology, drug and other manufacturers are working with officials behind closed doors even as President Donald Trump tries to deliver on his campaign promise to overhaul the tax code, reported Reuters.
They hey are telling the White House and Treasury Department that if companies are forced to bring home, or repatriate, foreign earnings, they want a sharply reduced tax rate. Lobbyists said, in line with tax cuts already embraced by Republicans in the House of Representatives.
The administration has indicated it may favor the tax rate on offshore profits to 10 percent from 35 percent, but the lobbyists are making an aggressive case that is not enough.
Instead, a lower, bifurcated rate of 3.5 percent on earnings already invested abroad in illiquid assets, such as factories, and 8.75 percent on cash and liquid assets, is being demanded by the lobbyists.
Trump argued it could be used to raise tax revenue to pay for tax cuts or infrastructure and proposed setting the rate at 10 percent, during the 2016 presidential campaign.
Indication that the tax reform is advancing on Trump's slow-moving domestic policy agenda is given by discussion of hard numbers in the long-running repatriation debate. Or the early framework for a long slog ahead, which could be adjusted if they get concessions elsewhere, are being set by just the lobbyists.
"For us, it’s how you create a tax environment where you give business long-term certainty," one lobbyist said.
Another lobbyist told Reuters that the changes being discussed are part of larger tax reform. "Our international tax system is out of whack with the rest of the world. This system is not sustainable."
2004- 2005 was the last time Washington let multinationals pay only a small fraction of the taxes due on their foreign profits and the lobbyists' demands represent the latest effort in a push by corporate America that has been under way since 2004-2005.
Apple Inc CEO Tim Cook said earlier this month on CNBC that repatriation and comprehensive tax reform are important to the economy. "The administration ... they're really getting this and want to bring this back and I hope that that comes to pass," he said. Apple held $239.6 billion of cash and securities offshore as of April 1.
35-percent income tax on profits worldwide are to be paid by U.S.-based corporations under current law. But tax on active profits left outside the country can be deferred by companies.
According to Audit Analytics, a corporate research firm, about $2.6 trillion in earnings is being held overseas by more than 500 U.S. companies and this has been incentivized by the deferral rule has for the multinationals to park profits offshore.
The firm said that including Apple, Microsoft Corp, Pfizer Inc and General Electric Co, nearly a third of that is held by 10 companies. All four of those companies declined to comment.
But in order to avoid the 35-percent tax due, these companies and hundreds of others do not bring their foreign profits into the United States.
Two things would happen if the $2.6 trillion overseas were repatriated at once First, a big jolt of tax revenue for Washington would be the result. Second, the economy can make use of the repatriated profits that are not collected by the Internal Revenue Service.
(Source:www.reuters.com)
Lobbyists for technology, drug and other manufacturers are working with officials behind closed doors even as President Donald Trump tries to deliver on his campaign promise to overhaul the tax code, reported Reuters.
They hey are telling the White House and Treasury Department that if companies are forced to bring home, or repatriate, foreign earnings, they want a sharply reduced tax rate. Lobbyists said, in line with tax cuts already embraced by Republicans in the House of Representatives.
The administration has indicated it may favor the tax rate on offshore profits to 10 percent from 35 percent, but the lobbyists are making an aggressive case that is not enough.
Instead, a lower, bifurcated rate of 3.5 percent on earnings already invested abroad in illiquid assets, such as factories, and 8.75 percent on cash and liquid assets, is being demanded by the lobbyists.
Trump argued it could be used to raise tax revenue to pay for tax cuts or infrastructure and proposed setting the rate at 10 percent, during the 2016 presidential campaign.
Indication that the tax reform is advancing on Trump's slow-moving domestic policy agenda is given by discussion of hard numbers in the long-running repatriation debate. Or the early framework for a long slog ahead, which could be adjusted if they get concessions elsewhere, are being set by just the lobbyists.
"For us, it’s how you create a tax environment where you give business long-term certainty," one lobbyist said.
Another lobbyist told Reuters that the changes being discussed are part of larger tax reform. "Our international tax system is out of whack with the rest of the world. This system is not sustainable."
2004- 2005 was the last time Washington let multinationals pay only a small fraction of the taxes due on their foreign profits and the lobbyists' demands represent the latest effort in a push by corporate America that has been under way since 2004-2005.
Apple Inc CEO Tim Cook said earlier this month on CNBC that repatriation and comprehensive tax reform are important to the economy. "The administration ... they're really getting this and want to bring this back and I hope that that comes to pass," he said. Apple held $239.6 billion of cash and securities offshore as of April 1.
35-percent income tax on profits worldwide are to be paid by U.S.-based corporations under current law. But tax on active profits left outside the country can be deferred by companies.
According to Audit Analytics, a corporate research firm, about $2.6 trillion in earnings is being held overseas by more than 500 U.S. companies and this has been incentivized by the deferral rule has for the multinationals to park profits offshore.
The firm said that including Apple, Microsoft Corp, Pfizer Inc and General Electric Co, nearly a third of that is held by 10 companies. All four of those companies declined to comment.
But in order to avoid the 35-percent tax due, these companies and hundreds of others do not bring their foreign profits into the United States.
Two things would happen if the $2.6 trillion overseas were repatriated at once First, a big jolt of tax revenue for Washington would be the result. Second, the economy can make use of the repatriated profits that are not collected by the Internal Revenue Service.
(Source:www.reuters.com)
