Main selling points ofIt meant multinational corporations could stop billions of profits from flowing into offshore tax havens and bring that money back to the United States, where it could create jobs and fuel economic growth. However, recent analyzes conclude that the tax audit has not been able to stop the inflow of foreign corporate profits.
According to a study by Javier Garcia-Bernardo and Petr Janský from Charles University in Prague and Gabriel Zucman from the University of California, Berkeley, TCJA is Bermuda and Ireland. From 2015 to 2020, before and after the law came into force, the proportion was stable at around 50%.
“For decades, Congress has been catching up as business owners, with some tax havens driving international tax policy,” Zucman said.This week’s New York Times editorial summarized the results.
“As a result, working-class Americans are left with underfunded public schools and hospitals as missile ships for the wealthy board of directors into space,” he added.
TCJA, the result of the Trump administration’s signature policy, has received a lot of support since its inception nearly four years ago. The law has effectively reduced corporate taxes and tax rates for US companies by 10%. This is a move that its proponents said will boost economic growth. Most taxpayers enjoyed some tax exemption under the law, but corporations and wealthy individuals didAs low or middle income families.
As President Joe Biden, this issue is once again paramount.To fund an ambitious plan to modernize the country’s ailing roads, bridges, and other infrastructure.
The first of its kind
Economists rely on tax data from the IRS and data from other governments and corporations, and their study is the first to “empirically assess the impact of tax cuts and labor laws” on transfers of profits from US multinational corporations. He said he believed it. Company.
TCJA cut the corporate tax rate from 35% to 21%, but many companies doBefore overhaul, as it uses common and legal methods such as deductions and write-offs. At the same time, the survey found that the effective tax rate on domestic profits has decreased by 10%.
Multinational corporations that pay taxes in both the United States and other countries enjoyed a typical tax rate of around 14% in 2019, up from 19% in 2017 before the new law went into effect, researchers said. Found.
The corporate tax debate takes place earlier this month as the Biden government works to introduce a minimum global tax of at least 15% in 130 countries and jurisdictions.It will impose such taxes on corporations. Some countries have not signed, including Ireland, which has a corporate tax rate of 12.5%, but aims to level the playing field between countries.
“That is not enough”
Zucman said that the global minimum tax rate of 15% is not enough.
“But even congressional approval of a minimum global corporate tax of 15% is not enough to close the growing economic gap between the rich and middle class in the United States,” Zuckman wrote. “When you impose a 15% tax on a multinational company, you face a below-average rate that the United States pays on state and federal income taxes.”
According to Zuckman, the remedy is for Congress to raise the minimum corporate tax rate to 25%, which will add an additional $ 200 billion to annual revenues for a range of government services, including free universal kindergartens. Said. And nationwide high-speed broadband.
Meanwhile, Treasury Secretary Janet Yellen is calling for a higher global minimum tax rate for G20 members, according to Reuters, but a specific tax rate has not yet been set.
Tax cuts and labor laws should stop corporate tax evasion. That was not the case, according to the study.
Source link Tax cuts and labor laws should stop corporate tax evasion. That was not the case, according to the study.