War on Taxes

America has been fighting a war on taxes for thirty years, and this is one war we’ve won, though that hasn’t stopped us from fighting or believing that we are over-taxed. Trump, in one of his many lies, claimed that American corporations were taxed more heavily than in any other country. Even if corporations actually paid their taxes, it wouldn’t be true, but as this Bloomberg article explains, many of our corporations park a lot of money offshore. Then they take advantage of a loophole to get paid for doing so.

Trump is likely to propose a repatriation tax holiday to allow companies to bring that money back into the US, on the theory that they will invest it in jobs. Not likely. This has been tried before, under George W. Bush. The money brought back goes into rewarding shareholders and executives through stock buybacks and bonuses, not into hiring. Apple, the biggest user of this mechanism, is not going to start manufacturing iPhones in America because of a tax holiday. They’re not going to hire a bunch of people. They can do that already; they can borrow money at low interest rates and deduct the interest to reduce the little tax they do pay if they needed to hire more people.

They will take the tax holiday, push up their stock price by buying back stock, and go right back to stashing the cash overseas, waiting for the next tax holiday.

Author: sherrinichols

I got things to say!

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