Senators develop frameworks for the revision of the Trump-era guidelines for worldwide taxation

0
84
Senators develop frameworks for the revision of the Trump-era rules for international taxation

The Chairs of the Senate Finance Committee have put in place a framework for the revision of the rules for international taxation set out by the Trump administration in the Tax Act 2017.

© Shutterstock

Specifically, the rule changes aim to revise three Republicans created in 2017 tax legislation: Low Global Intangible Tax Income (GILTI), Foreign Intangible Income (FDII), and Property Tax on Erosion and Abuse (BEAT). Legislators say the framework aims to ensure that large international companies “pay their fair share”.

“The Republican tax bill was a massive giveaway for mega-corporations, and corporate tax revenues have fallen through the rocks. While working families have struggled to pay rent and buy groceries, companies whose taxes have been cut in half are doing better than ever. Congress needs to ensure that mega-corporations pay their fair share to fund critical investments in the American people, ”said Ron Wyden (D-OR), chairman of the Senate Finance Committee. “It starts with ending incentives to send jobs overseas and closing the loopholes that allow companies to dump their profits in tax havens and instead reward companies that invest in the US. Not only would our framework generate critical revenue to fund President Biden’s infrastructure package, it would encourage additional investment in the United States and its workers. “

Wyden is working with Sens. Sherrod Brown (D-OH) and Mark Warner (D-VA) on the overhaul.

“For decades, our tax laws have rewarded companies who stop manufacturing in the US and move American jobs overseas, and the 2017 Republican tax law only made it worse with a 50 percent discount coupon for companies that move jobs to Mexico or relocate to China. Said Brown. “Our plan is simple: businesses should pay their fair share, just like families in Ohio, and they shouldn’t get tax breaks for shipping overseas workers. We will reward companies that create jobs and invest in America. “

Regarding GILTI, there are plans to remove the tax exemption for overseas factories, which is incentivized to ship overseas orders. The Senators propose moving to a country-specific system that prevents multinational corporations from protecting income in tax havens from US taxes.

“We need an international tax system that rewards companies that invest here in the US, particularly in cutting-edge technologies that determine the future success of our economy and the ability to create high-paying jobs,” said Warner. “Unfortunately, the changes to the 2017 Law on the International Tax System were fraught with incentives that do the opposite, encouraging companies to do offshore operations and jobs. This framework is a first step towards finding novel, creative approaches that will solve the problems with the current system and provide companies with long-term security and stability for federal revenues so that we can remain globally competitive. “

To revise the FDII, the Senators are also proposing to end the incentive for offshore factories and balance the FDII and GILTI rates. The offshoring incentive will be replaced by a provision that rewards the innovation-promoting activities of the current year in the US, such as research and development. Finally, in order to revise BEAT, the Senators propose restoring the value of domestic investment tax credits. The proposal would create a higher second tax bracket for income related to ground erosion.