Corporate Tax Changes
There has been a proposal to reduce the corporate tax rate to 25%. Based on research, the United States has the worst tax codes in the entire world. Because of the corporate tax situation, multinational corporations are holding an estimated $1.7 trillion in earnings abroad to avoid the 35% tax rate (Yang, 2012). Policymakers are deliberating compromise in an overhaul of the tax code for the year 2013.
The Obama administration has proposed a "global minimum tax" that would apply to income earned in any country. This is the most viable plan due to the fact of U.S. GAAP is conforming to IFRS rules to form international standards. Where all corporations do not pay the same tax rates from industry to industry, even from year to year, it would make the tax rate codes more fair for all corporations whether they are a multinational or domestic firm. It would also simplify the corporate tax codes by moving to one set of international tax code standards with the global minimum tax code, instead of having to be concerned about the different codes of each country.
Experts warn against cutting foreign tax codes because it could radically change how companies behave, reduce tax revenue, give companies more leeway to exploit taxes, and drive jobs overseas. If a global minimum tax was implemented starting, say January 1, 2013, it would eliminate the advantage of foreign tax...
It would help drive revenue and jobs in all economies where more people would benefit and corporate tax holders would all pay closer to the same tax rate, depending on what deductions they would qualify for.
The foreign tax codes force corporations to pay U.S. taxes regardless of what country they do business in with the only break being given is they only pay the taxes when the funds are brought back to the U.S Corporations would feel freer to bring earnings back to the U.S. If the tax codes were designed in more fair ways. Implementing the global minimum tax of 25% and doing away with the foreign tax codes provides a more even picture on what the corporations would be paying. Where large trucking companies paid a 30% rate and biotechnology companies paid less than 5% in 2009 (Appelbaum, 2011), the rates that companies would pay overall would be more equal between corporations in the various industries and whether they are domestic firms or multinationals. Domestic firms would also be given a way to spur economic growth with job creation by paying less in taxes. There could be less resentment between organizations if they see things are fairer from one industry to another.
Cutting the foreign tax codes would reduce tax revenue…
