A prestigious group of international tax professors argues against “a highly-preferential rate of tax on the $2.1 trillion in untaxed foreign profits of U.S. multinationals,” just as Donald Trump calls for a low 10-percent rate on that huge amount. The professors say:
“In sum, we do not believe these companies should be rewarded with a discounted tax rate, regardless of whether the money will be used for productive investments, which is highly unlikely given the discredited experience with the 2004 repatriation tax holiday documented by numerous experts. The understanding under deferral has always been that these earnings would eventually be taxed at the full rate less credits and deductions. That should not change, so we urge you not to buckle under pressure from corporations whose offshore profits have ballooned nearly fivefold since the last repatriation holiday – from about $435 billion in 2005 to $2.1 trillion today – in anticipation of another holiday that would let them avoid paying what they owe.”
How to tax this offshore stash is a test of politicians for me. If they want to tax it all right away, they’re on the people’s side. If not, they are on the corporations’ side. I quit giving to some Democrats because of this single issue.
Here is my 2012 humor piece from Tax Notes (footnotes omitted), to the tune of the Beatles’ Revolution:
You1 say you want repatriation:
A tax-free corp’rate holiday.2
You talk about the job creation
That you’ll produce once you can pay
Big dividends out of the cash that you’ve stashed offshore;
But that didn’t work when we tried in two thousand four.3
Why don’t you go and pay That tax? Your tax. Your tax.
You say don’t tax your foreign income:
It came from Ireland or somewhere.
Through paper comp’nies there have been some
Shenanigans to shift it there.4
With so much intangibles income concealed through Dutch
Sandwiches we don’t believe we can trust5 you much.
You just don’t want to pay That tax. Your tax. Your tax.
You’ve come up with a new solution6
Because you didn’t hire last time:
Now, when you make a distribution,
The whole economy will climb.
But when you were shifting that income the rules were clear:
Pay tax on the income whenever you bring it here.
So go ahead and pay That tax. Your tax. Your tax.
You say your plan will help the budget,7
But one good pop8 is all we’ll get.
We won’t misjudge it; you can’t fudge it:
Your scheme will just create more debt.
Now if in your fantasy our Uncle Sam should drown,9
You don’t give a damn if your schemes bring the country down.
We ought to make you pay That tax.
Footnotes and all are at https://newtax.files.wordpress.com/2012/07/ssrn-id21032691.pdf.