2017-02-06independent.co.uk

... for all Brady's rhetoric and the protectionist-sounding border tax, the effect of the reform would actually be neutral on America's terms of trade with the rest of the world.

But the great advantage of this reform is that it would eliminate the incentive for multinational firms to dodge their US corporate taxes through accounting tricks, such as registering profits at subsidiaries abroad and relocating their corporate headquarters to tax havens.

No matter where they based their headquarters, multinationals would be liable for a hefty US tax bill if they sold plenty of products and services in America.

This analysis is broadly correct, but not entirely the whole story -- the reform wouldn't impact companies that truly are based abroad, since they aren't generally filing taxes in the US (a tariff would have to be added to match the import-taxing effects, to put a "tax" on foreign importers. But that isn't even really a goal of the reform). So, erstwhile U.S. companies with a large global footprint could still "invert" overseas to avoid the impact of the change -- though inversion is also being cracked down on.



Comments: Be the first to add a comment

add a comment | go to forum thread