GREAT AGAIN! Trump Set to Bring Home $2.6 Trillion in Offshore Profits

by Fred Lucas – Lifezette

At least $2.6 trillion in American corporate profits are parked outside the country, and President-Elect Donald Trump’s major tax reform plan could bring it back into the United States — which could provide a big boost to the economy and federal revenue.

Trump’s plan is part of his larger business tax plan to lower the corporate tax rate from a top rate of 35 percent down to 15 percent.

A key element is also providing a one-time tax rate of 10 percent on offshore corporate profits brought back to the United States, or repatriated money. After the one-time tax, the country would move to a “territorial” tax system, meaning only profits earned inside the country would be taxed. Ideally, this would do away with a disincentive for companies to reinvest inside the United States.

The Joint Committee on Taxation estimates that there is $2.6 trillion in offshore profits from American companies. That’s money that could be used to build in the United States. Repatriation, in economic terms, is the process for a U.S. parent company moving profits from a foreign-based affiliate back to the U.S. headquarters or to U.S. shareholders.

Currently, profits American companies make abroad are taxed only when the money is brought back into the country, up to 35 percent. Because the United States has one of the highest corporate tax rates in the world, corporations seek to avoid paying the rate by leaving the money offshore. So, the federal tax code is an incentive for U.S. companies to store foreign earnings in foreign subsidiary countries with lower tax rates.

This is one rare area where the Left doesn’t want to be more like Europe. Of the 36 countries in the Organization for Economic Cooperation and Development, only the United States, Mexico, Ireland, South Korea, and Israel have the antiquated tax code. The other 30 countries, including Canada, Japan, Britain, France, Italy, and Germany have a territorial tax system that Trump wants to move closer to.

Grover Norquist, president of Americans for Tax Reform, believes the repatriation tax rate will likely be lower than 10 percent when Trump works out the specifics with House Republicans.

“We want to bring the money back here,” Norquist told LifeZette. “Under the present law, you’re better off leaving it in Japan to build a factory. That’s stupid policy.”

The new money in the United States will mean companies will have an incentive to expand locally and that will ultimately mean more federal revenue, Norquist predicted.

You can read more here 

Support the Trump Presidency and help us fight Liberal Media Bias. Please LIKE and SHARE this story on Facebook or Twitter.