Trump Treasury Officials Are Trying to Make It Easier for Wall Street to Move Money Offshore
October 11th 2019
By Dan Desai Martin
The Treasury Department is reportedly mulling plans to weaken or eliminate an Obama-era regulation to discourage companies from moving their cash offshore and thus avoid paying taxes, Bloomberg reported Tuesday.
In 2016, President Obama put a rule in place to prevent companies from using an accounting tactic that relies on a company borrowing money from an offshore branch in order to lower their corporate tax rate. Under the rule, the IRS could count the loan as equity, therefore negating any tax advantage.
But Trump’s Treasury Department may weaken or get rid of the rule entirely, thereby making it easier for companies to send cash offshore and pay even less in taxes.
The rationale behind the change is that the Trump administration slashed corporate taxes so much in the 2017 tax law that there is no longer any reason companies would send money overseas.
However, Bloomberg notes that the U.S. Chamber of Commerce is lobbying to have the rule repealed. It would be odd for an organization representing business interests to spend time lobbying for an outcome that would not impact businesses.
At the same time Treasury is contemplating a move that would enable companies to pay less taxes, the Congressional Budget Office reports that the national deficit is just shy of $1 trillion this year, thanks in large part to the 2017 tax law.
The 2017 tax law saw a massive financial windfall for Wall Street corporations, with taxes lowered from 35% to 21%. Trump and Republican supporters promised the billions saved by corporations would trickle down to workers, but studies show corporations used much of the cash to enrich Wall Street investors through stock buybacks. Wages and take-home pay for workers have increased only nominally, while much-ballyhooed bonuses failed to dramatically influence the take-home pay of the average worker.
Many experts agree the tax law failed to provide the “rocket fuel” to the economy promised by Trump, and recent economic indicators point to a sluggish economy tinkering on the brink of recession. Trump’s trade wars, particularly with China, have bankrupted farmers and are costing consumers thousands of dollars.
Trump pledged billions to bail out farmers, and now is contemplating a way for corporations to lower taxes even further.
The rest of Americans continue to be left out in the cold.
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