Quartz: US Tax Bill Is a Massive Victory for Globalization

The US tax bill is a big win for corporations, with corporate income taxes reduced during a time of record profits, reports Tim Fernholz for Quartz. Emboldened multinationals may expect other countries to do the same. “The US corporate tax rate is being cut by 40%, and rather than taxing global earnings, the US will move to a territorial system, with foreign revenue taxed at a bare minimum,” he writes. The bill also endorses business trends that shift jobs from the United States to other countries. Multinational companies have long deferred taxes on overseas earnings, arguing that these should go untaxed. The Trump administration anticipates the untaxed overseas earnings to return and be invested in the United States in exchange for a one-time tax rate of 15.5 percent. However, companies could still avoid taxes by investing in overseas factories. “Even if the loopholes can be fixed, many experts expect the move to empower multinationals to demand new tax concessions in other jurisdictions, driving a global race to the bottom,” Fernholz concludes. “European finance ministers are already crying foul, and one likely result of the US changes will be new laws in other developed economies to favor global corporations.” – YaleGlobal