Link: https://www.wsj.com/articles/a-better-corporate-tax-for-america-11617813355
Excerpt:
If you’re a U.S. firm that does business abroad, the TCJA essentially gives you an easy — but perverse — choice: You can move your foreign profits and operations to America, where the corporate tax rate is 21%, or you can keep them anywhere else in the world, where the U.S. will charge you around half that. It’s not a hard call, especially because the minimum tax is calculated based on a firm’s total global profits rather than looking at what the company earns in each different country. With no one looking at individual jurisdictions, corporations can shift and book profits wherever they can get the lowest tax bill. The TCJA also makes the first 10% of returns earned by foreign assets tax exempt, a powerful incentive for companies to offshore factories and jobs. It isn’t an overstatement to say that today most firms would prefer to earn income anywhere but America.
The U.S. isn’t the only loser in this race to the bottom. So are our corporations. The global competition for low rates allows American firms to pay less taxes — or none at all — but they still pay a significant cost. Over the next 10 years, more than $2 trillion of the U.S. corporate tax base will flow out of the country because of the broken system I’ve described. Our tax revenues are already at their lowest level in generations, and as they continue to drop, the country will have less money to invest in airports, roads, bridges, broadband, job training, and research and development.
Author(s): Janet Yellen
Publication Date: 7 April 2021
Publication Site: Wall Street Journal