IMPACT OF TRUMP TAXES REMAINS HIDDEN
January 7, 2020 - Douglas Myser
Impact of trump taxes remains hidden. Armed with legions of lobbyists, companies have been pushing hard--and successfully--to weaken new federal taxes that take aim at overseas tax havens. Many of them have managed to avoid publicly disclosing how much they owe under the new taxes. Without such figures, it becomes virtually impossible for outsiders to work out how much companies are saving from the watered down tax rules. In theory, this opacity should not exist. United States securities regulations have long required public companies to disclose even relatively minor tax expenses. Over the past year, this requirement has led to a small number of companies revealing the effect of the new IRS taxes of overseas income. yet many others--including some longtime users of tax havens--appear to have found ways around disclosing how the overseas taxes will affect them. How the new taxes are supposed to work. President Trump's 2017 tax law did not just cut taxes for companies, it also introduced new provisions aimed at discouraging the practice of routing income through countries with ultralow taxes. One of those was a tax on "global intangible low taxed income" known as GILTI, which acts as a minimum tax on certain profits that companies earn abroad. GILTI was expected to hit corporations that appeared to be paying almost not tax on their overseas income. Impact of trump taxes remains hidden.
In 2016, for example, Facebook's foreign taxes were only 3 percent of its foreign profits. By taxing income that flows through offshore havens, the GILTI initiative was supposed to bring in tens of billions of dollars for the United States Treasury and to partially offset the revenue lost form the 2017 law's deep tax cuts. What companies should reveal. United States securities laws require publicly traded companies to provide detailed explanations of their taxes in their annual reports. Specifically, companies must reveal any individual tax expenses that exceed 5 percent of what is known as their statutory income tax expense.
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