Trump: 'No one really knows' how much tax plan would generate
Source: Reuters
OCTOBER 24, 2017 / 12:19 PM / UPDATED 2 HOURS AGO
WASHINGTON (Reuters) - U.S. President Donald Trump on Tuesday said he believed that Republicans sweeping tax overhaul would help bring in $4 trillion in foreign profits from U.S. companies.
Its going to bring back, I would say, $4 trillion back into this country, Trump told reporters in the Oval Office.
Nobody even knows the amount, he said.
Trumps comments came shortly before he was scheduled to meet with Senate Republicans in an effort to try to build consensus for their proposed $6 trillion in tax cuts and help fill in details on how to pay for them.
Reporting by Roberta Rampton; Writing by Susan Heavey; Editing by Chizu Nomiyama
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Read more: http://www.reuters.com/article/us-usa-tax-trump/trump-no-one-really-knows-how-much-tax-plan-would-generate-idUSKBN1CT2DV
underpants
(182,826 posts)It's just more money for the corporations. Will they re-invest it into their own expansion? No one knows.
Larrybanal
(227 posts)even if they invest some of it, the chances are that it will be in another country or just go to investors. the 1950s are NEVER coming back
InAbLuEsTaTe
(24,122 posts)unblock
(52,247 posts)there's a ton of money, possibly more than $10 trillion, parked overseas by u.s. multinational corporations because they've been evading taxes, hoping for a lower rate or a tax holiday when they could bring all those foreign profits back to the u.s. (because our defective tax system lets them play games like this).
if $10 trillion were to be sucked out of places like europe, it would likely plunge it into recession, as their economy isn't in great shape and a blow like that would seriously hurt.
then on the u.s. side, what good would an additional $10 trillion in investment capital do? there's no real shortage of investment capital at the moment, so it's not like new projects would suddenly get funded. no, most likely it would simply cause asset inflation as all that cash is funneled into real estate and the stock market.
and again, no good can come of that, at least not in the long run....
KY_EnviroGuy
(14,492 posts)If it's "parked" capital, unless there's a tax or investment advantage, why would they instead "park" it in the USA?
This is out of the range of my knowledge, so just looking for more understanding.
unblock
(52,247 posts)via dividends and/or stock buybacks. u.s. companies can't do this with european (e.g.) profits without first repatriating it to america and incurring a tax liability.
it also opens up more acquisition possibilities, if the target is a u.s. company or even just has a u.s. subsidiary.
if the tax liability is small enough, they'll do it.
keep in mind that the decision-makers would all personally benefit from this, unless they figure the company can invest the money better in europe. (or wherever they earned their overseas profit) but typically, these companies have already invested what they need to for normal business purposes, so they're really just investing the "parked" money as a sort of investment fund.
most ceos and major shareholders would rather have direct control over that money. they just don't want to pay their fair share of taxes to get it.
KY_EnviroGuy
(14,492 posts)Even I can see possibilities for blowback from our allies overseas, perhaps affecting their potential investments here.
Questions:
1. Were taxes paid on these monies in the nation where they were earned?
2. Is any of this money profits from US operations that were transferred to overseas subsidiaries to avoid US taxes?
3. Do you think a significant amount of this money would be used to invest in new job producing operations in the US?
Thanks again for your input!
unblock
(52,247 posts)(from a not an international tax lawyer )
1) taxes should have been paid in whatever jurisdiction the profits were legally earned, say, ireland.
my understanding is that if and when the money is repatriated to the u.s., they owe u.s. taxes on the original profit, but get a foreign tax credit for any taxes paid to a foreign country.
2) can profits from u.s operations be transferred to foreign subsidiaries to avoid taxes? ah, this is the stuff of much international tax evasion, both the legal kind and the not-so-legal kind. if i build a widget in america and sell it in america, there's usually not much i can do to avoid u.s. taxes. but what if my irish subsidiary builds it and sells it germany, then i can avoid u.s. taxes.
what if i have both u.s. and foreign subsidiaries? here's where it gets interesting. my u.s. subsidiary could do just a little bit of the manufacturing and then sell it to my irish subsidiary, which does the lion's share of the work. it makes sense to pay little to no u.s. taxes.
but what if the u.s. subsidiary does virtually all the real work, then sells the nearly finished product to the irish subsidiary *at cost* (so there's no profit earned in the u.s.). then the irish subsidiary does the tiniest final step in finishing the product and sells it to a customer in germany for a huge markup.
stated as such, this is illegal tax evasion ("transfer pricing" . however, there are obviously far more subtle ways of doing essentially this, just not being so obvious about it. there's clearly a grey zone where regulators can't say definitively that the internal price was knowingly manipulated to avoid taxes.
apple is king of this, imho. they sold many of their valuable patents to an irish subsidiary, and now that irish subsidiary charges a fortune to the u.s. company for use of those patents. this keeps apple's u.s. profits low and effectively transfers profits to ireland, well known for being of little interest to big corporations other than being a tax haven. did the irish subsidiary pay a fair market price for those patents? i can't say, but i have my doubts....
3) i do not think there are a huge amount of projects in need of capital that aren't getting capital right now, and i do not believe a massive influx of capital would lead to much expansion or entrepreneurial activity in the u.s.
i expect massive dividends and stock buybacks, followed by that money being invested in real estate and the stock market. in other words, asset inflation rather than real growth.
KY_EnviroGuy
(14,492 posts)it helped me recall things read years ago, especially about Apple.
I can easily see how if this happened too fast, it could blow up our stock market, since many claim we're in bubble territory now - especially in the tech arena. And, it would force us further into being a renter-only market for housing!
It's also easy to see how Republicans will be encouraged even more to participate in the race to the bottom on corporate taxes relative to the rest of the world, further damaging our social safety net.
Quite arrogant of them to argue this will help the average worker and consumer.
George II
(67,782 posts)Maggiemayhem
(811 posts)Left-over
(234 posts)Angry Dragon
(36,693 posts)ananda
(28,866 posts)He's the only important person in the world in his
own opinion.
Thor_MN
(11,843 posts)Last edited Tue Oct 24, 2017, 04:40 PM - Edit history (1)
Hell, go for broke is his style, he has done it several times. He doesn't understand that countries declaring bankruptcy is not the same as doing it yourself.
world wide wally
(21,744 posts)Same questions. Same arguments. Same everything.
Gee, why does the world think we're idiots?
I can't imagine where they get that idea.
red dog 1
(27,817 posts)(From Democracy Now interview cited above)
"An analysis by the Center for American Progress Action Fund shows President Trump's family and Trump's Cabinet members would, combined, reap a $3.5 billion windfall from the proposed repeal of the estate tax alone"
Pulitzer Prize winner David Cay Johnson's latest piece is titled:
"Nine Reasons Trump's tax Plan Will Hurt You"
K&R
jetwash
(13 posts)Trump has been saying this for months now. PolitiFact and FactCheck.org have both looked at the claim.
It's infuriating how Reuters simply regurgitates this BS without looking into it at all, months after it has been revealed as untrue.