A Look at the Senate Democrats' JOBS & INFRASTRUCTURE PLAN FOR AMERICA’S WORKERS

[Slade3200]

Corporations who were avoiding taxes by going over seas would pay more. That’s hardly the majority of corporations. Why wouldn’t you support them paying more and funding a cut for local businesses?

Corporations who were avoiding taxes by going over seas would pay more.

Of course, anything to make our corporations less competitive!

Why wouldn’t you support them paying more

We're the only major economy that tries to tax world wide income. Why?

Are you implying that inversion and avoiding taxes is a good thing because it stirs competition?! Please tell me I’m misreading your statement.

What do you mean when you say we are the only major economy taxing worldwide income?

Are you implying that inversion and avoiding taxes is a good thing because it stirs competition?!

Are you implying that taxing our corporations on world wide income makes them more competitive compared to foreign corporations that aren't taxed on worldwide income at 35%?

What do you mean when you say we are the only major economy taxing worldwide income?

If a Japanese company has a US division, Japan does not tax their US profits.
If a US company has a Japanese division, the US does tax their Japanese profit....if they bring it home.

You answered my first question with a question. Answer mine and I’ll answer yours.

As for your second point, You are talking about repatriation tax... remember when Obama proposed a 14% repatriation tax holiday with his proposal to reduce the corporate tax rate to 28%. Why don’t you think that got any traction?

Yes, lower taxes make our corporations more competitive.
Taxing world-wide income makes them less competitive.

As for your second point, You are talking about repatriation tax.

We're the only large economy that has a repatriation tax, because we're the only one taxing
our corporations on world wide income.

If a Japanese division in the US makes money, they can bring it back to Japan without owing
any Japanese taxes.

Yes, lower taxes make our corporations more competitive.
Taxing world-wide income makes them less competitive.

when you say “lower taxes” you are talking about tax rate from foreign countries. The US isn’t raising taxes it is keeping our tax rate consistent for American businesses. I don’t like high taxes so I’m not a big advocate of this policy, however I understand it. If you are an American company then the cost to do business is defined by our tax code. No matter whether you do business in California, Texas or Japan. If you make money and put it in your US bank account then you pay the legal US tax rate in that money. Otherwise you are incentivizing companies to do all their expansion in foreign countries with lower tax rates to save money. Do you want to keep jobs in the USA or send them over seas?

 

[Toddsterpatriot]

Corporations who were avoiding taxes by going over seas would pay more.

Of course, anything to make our corporations less competitive!

Why wouldn’t you support them paying more

We're the only major economy that tries to tax world wide income. Why?

Are you implying that inversion and avoiding taxes is a good thing because it stirs competition?! Please tell me I’m misreading your statement.

What do you mean when you say we are the only major economy taxing worldwide income?

Are you implying that inversion and avoiding taxes is a good thing because it stirs competition?!

Are you implying that taxing our corporations on world wide income makes them more competitive compared to foreign corporations that aren't taxed on worldwide income at 35%?

What do you mean when you say we are the only major economy taxing worldwide income?

If a Japanese company has a US division, Japan does not tax their US profits.
If a US company has a Japanese division, the US does tax their Japanese profit....if they bring it home.

You answered my first question with a question. Answer mine and I’ll answer yours.

As for your second point, You are talking about repatriation tax... remember when Obama proposed a 14% repatriation tax holiday with his proposal to reduce the corporate tax rate to 28%. Why don’t you think that got any traction?

Yes, lower taxes make our corporations more competitive.
Taxing world-wide income makes them less competitive.

As for your second point, You are talking about repatriation tax.

We're the only large economy that has a repatriation tax, because we're the only one taxing
our corporations on world wide income.

If a Japanese division in the US makes money, they can bring it back to Japan without owing
any Japanese taxes.

Yes, lower taxes make our corporations more competitive.
Taxing world-wide income makes them less competitive.

when you say “lower taxes” you are talking about tax rate from foreign countries. The US isn’t raising taxes it is keeping our tax rate consistent for American businesses. I don’t like high taxes so I’m not a big advocate of this policy, however I understand it. If you are an American company then the cost to do business is defined by our tax code. No matter whether you do business in California, Texas or Japan. If you make money and put it in your US bank account then you pay the legal US tax rate in that money. Otherwise you are incentivizing companies to do all their expansion in foreign countries with lower tax rates to save money. Do you want to keep jobs in the USA or send them over seas?

when you say “lower taxes” you are talking about tax rate from foreign countries.

If we tax our corporations on money they make in other countries, that makes our corporations less competitive.

The US isn’t raising taxes it is keeping our tax rate consistent for American businesses.

The consistent rate is taxing companies on US earnings and not taxing them, at all, on foreign earnings.

No matter whether you do business in California, Texas or Japan. If you make money and put it in your US bank account then you pay the legal US tax rate in that money.

Exactly, and that makes us less competitive.

Otherwise you are incentivizing companies to do all their expansion in foreign countries with lower tax rates to save money.

By taxing worldwide, you incentivize foreign companies to buy US companies...or...our companies to invert.

 

[Flopper]

Well, that's what Trump says. However, the provisions in law when applied tell a different story.

The law takes currently untaxed profits of US companies being stored abroad and taxes them at a new ultra-low rates if brought back to the US: 8 percent for profits invested in real estate, such as Trump properties and other hard assets abroad, and 15.5 percent for profits in cash and stock and other liquid assets.

But it’s an incredibly bad idea. The repatriation provision in the law significantly reduces tax revenues from these corporate giants and effectively rewards companies that kept profits abroad. That doesn’t raise money — and what’s more, it costs money in the long term by telling companies that storing profits overseas will be rewarded in the future.

No matter how well meaning a tax reform bill may be, the lobbying efforts of giant corporations will put more money in their pockets.

How can the repatriation provision reduce revenues when multi national corporations aren't paying taxes to the US on profits made overseas now? That makes zero sense. If you weren't paying the Feds anything but by lowering your tax rate I induce you to bring profits back into the US where you ARE paying taxes on that money...it's obvious that will increase revenues.

Contrary to what has been reported in the media, large corporation will bring profits back to use without a large tax incentive,(15% or 8%). By reducing rates to 21% a lot of profits will come back. Will there be enough move back to the US to make up the loss in revenue (between 21% and 15% or 8%). Maybe, maybe not. Most decisions to move profits back to US will depend on the profitability there vs hear. It's not just a tax decision.

Congress did something very similar in 2004, offering companies a one-time "repatriation holiday" where they could bring back earnings and face a tax of only 5.25 percent, about a seventh of the normal 35 percent rate. The hope was that this money would then be invested in job-creating business activities in the US. But that’s not what happened: The top companies repatriating earnings actually shed jobs over the next few years, and the funds were mostly funneled to shareholders in the form of higher dividends and more stock buybacks. That helps wealthy stock owners, but not the overall economy.
The tax bill is a giant permission slip for shipping profits overseas

What the 2004 repatriation holiday showed quite clearly, Flopper is that even if you give corporations the ability to bring money into the US at a lower tax rate they will not invest said money to create new jobs if conditions don't warrant it. The bulk of repatriated monies brought into the country were by large "mature" corporations with little room to grow. The management of many of those companies were planning to downsize obsolete jobs before the repatriation holiday and the ability to bring in cash at a lower taxed rate did not change those plans.

I'm still baffled by your claim that there will be a loss of revenue granting tax relief to monies held overseas. How can you lose something that you're not getting in the first place?

Maybe I didn't make myself clear. Without the repatriation clause, corporation will bring money back at the 21% rate. By adding the incentive of a rate as low 8%, corporations will not bring the money at 21% but 8% and that is tax revenue loss for those corporations that would have brought the money back at 21%.

Read the reparation clause from the law, "As a transition to the new regime, deemed repatriation of previously untaxed “old earnings.” A 15.5% rate applies to earnings attributable to liquid assets and an 8% rate applies to earnings attributable to illiquid assets" There is nothing in the law saying how these funds can be used. Although we hope they will find their way into business expansions that will lead to substantial job growth, it seems quite likely that a lot of those funds will end up in stock buy backs, dividends to stockholders, and investments in non-labor intensive business expansions.
https://home.kpmg.com/content/dam/kpmg/us/pdf/2017/12/tnf-new-tax-law-dec22-2017.pdf

But without the repatriation clause, what's the incentive to bring the revenue back at all?

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

 

[mikegriffith1]

They could bring it back at 21% where previously it was 35%.

Actually, the tax-cut bill established a one-time special repatriation rate of 13.5% for American money parked overseas, which is why so much of it is now coming back.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

The new corporate tax rate is not graduated at all. It is a flat rate. So there is no longer an "effective rate" vs. a "top rate." If you pay corporate income taxes in the U.S., your rate is 21%.

 

[Toddsterpatriot]

How can the repatriation provision reduce revenues when multi national corporations aren't paying taxes to the US on profits made overseas now? That makes zero sense. If you weren't paying the Feds anything but by lowering your tax rate I induce you to bring profits back into the US where you ARE paying taxes on that money...it's obvious that will increase revenues.

Contrary to what has been reported in the media, large corporation will bring profits back to use without a large tax incentive,(15% or 8%). By reducing rates to 21% a lot of profits will come back. Will there be enough move back to the US to make up the loss in revenue (between 21% and 15% or 8%). Maybe, maybe not. Most decisions to move profits back to US will depend on the profitability there vs hear. It's not just a tax decision.

Congress did something very similar in 2004, offering companies a one-time "repatriation holiday" where they could bring back earnings and face a tax of only 5.25 percent, about a seventh of the normal 35 percent rate. The hope was that this money would then be invested in job-creating business activities in the US. But that’s not what happened: The top companies repatriating earnings actually shed jobs over the next few years, and the funds were mostly funneled to shareholders in the form of higher dividends and more stock buybacks. That helps wealthy stock owners, but not the overall economy.
The tax bill is a giant permission slip for shipping profits overseas

What the 2004 repatriation holiday showed quite clearly, Flopper is that even if you give corporations the ability to bring money into the US at a lower tax rate they will not invest said money to create new jobs if conditions don't warrant it. The bulk of repatriated monies brought into the country were by large "mature" corporations with little room to grow. The management of many of those companies were planning to downsize obsolete jobs before the repatriation holiday and the ability to bring in cash at a lower taxed rate did not change those plans.

I'm still baffled by your claim that there will be a loss of revenue granting tax relief to monies held overseas. How can you lose something that you're not getting in the first place?

Maybe I didn't make myself clear. Without the repatriation clause, corporation will bring money back at the 21% rate. By adding the incentive of a rate as low 8%, corporations will not bring the money at 21% but 8% and that is tax revenue loss for those corporations that would have brought the money back at 21%.

Read the reparation clause from the law, "As a transition to the new regime, deemed repatriation of previously untaxed “old earnings.” A 15.5% rate applies to earnings attributable to liquid assets and an 8% rate applies to earnings attributable to illiquid assets" There is nothing in the law saying how these funds can be used. Although we hope they will find their way into business expansions that will lead to substantial job growth, it seems quite likely that a lot of those funds will end up in stock buy backs, dividends to stockholders, and investments in non-labor intensive business expansions.
https://home.kpmg.com/content/dam/kpmg/us/pdf/2017/12/tnf-new-tax-law-dec22-2017.pdf

But without the repatriation clause, what's the incentive to bring the revenue back at all?

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

 

[Oldstyle]

So what you're saying is that the ACA was the ONLY thing that Barry could concentrate on for the better part of two years? How pathetic is that? Why didn't he pass comprehensive immigration reform as he promised? Why didn't he redo the tax code?

Once again...the GOP didn't have the ABILITY to "shut down" what the Democrats were doing and that's obvious if you look at the passage of the ACA despite not getting any GOP support! So if Obama and the progressive wing of the Democratic Party could pass ObamaCare without Republican help...then why couldn't they pass tax reform?

There was a lot legislation in Obama's first two year other the ACA. Tax cuts, bailout of automotive industry, Consumer Protection, economic stimulus to lessen impact of the recession, Children Health Insurance Programs, and of course the ACA. After 2010, major democratic legislation dried up with republican control of congress.

So why didn't they tackle tax reform or immigration reform? Obama promised to address both early in his Presidency. Instead he ignored them.

Priorities man, Incase you didn’t get the memo we were fresh of one of the worst recessions in our nations history. First few years went into righting the ship and healthcare.

Priorities? Interesting concept, Slade! If you were truly concerned with "righting the ship" from one of the worst recessions in the nation's history...then why would you spend the bulk of your time passing a healthcare bill that caused so much uncertainty that it hampered economic recovery? Especially a healthcare bill that you deliberately designed to fail?

Well healthcare wasn’t their immediate focus, you can go back at learn the history yourself but there was a series of actions taken to pull this country out of the recession and put us on a recovery pathway that has now lead to historical lows in unemployement and recording breaking stock market.

I'm a history major, Slade and I remember recent history rather well, thank you! Healthcare WAS an immediate focus for them...starting early in 2009.

 

[busybee01]

Your point being?

A tax cut that didn't actually cut taxes.

How so? Would manufacturing companies not see a tax cut from 38% to 25%? I believe they would

Remember a similar analysis scored Trumps tax plan at adding trillion to the deficit. Doesn’t a revenue neutral plan sound a little better to you?

The Senate’s Official Scorekeeper Says the Republican Tax Plan Would Add $1 Trillion to the Deficit

How so?

From your own link.....again

In the long-term, the plan is revenue-neutral – savings from closing some corporate tax loopholes

It is not revenue neutral. Paul Ryan said he could get the rate down to 25% based on the tax loopholes that they had agreed to. It got down to 21% by taking money from individuals.

It is not revenue neutral. Paul Ryan said......

We're talking about Obama's "tax cut".

It got down to 21% by taking money from individuals.

How does the corporate tax cut take money from individuals?

The idea of corporate tax reform is that you get rid of business tax breaks. Paul Ryan said he could only get the rate down to 25% with the loopholes that were being closed. They got the money to lower it to 21% by not indexing the standard deduction to inflation. That is a backdoor tax increase as the deduction is worth less each year. Also the tax brackets are indexed to chained inflation rather than the standard CPI. This means people will be pushed into a higher tax bracket which is another backdoor tax increase. Also the mandate was projected to save $300 billion. That comes from people being kicked off of their health insurance. The rate should be at 25% unless Republicans can find more business tax breaks to end.

 

[Slade3200]

There was a lot legislation in Obama's first two year other the ACA. Tax cuts, bailout of automotive industry, Consumer Protection, economic stimulus to lessen impact of the recession, Children Health Insurance Programs, and of course the ACA. After 2010, major democratic legislation dried up with republican control of congress.

So why didn't they tackle tax reform or immigration reform? Obama promised to address both early in his Presidency. Instead he ignored them.

Priorities man, Incase you didn’t get the memo we were fresh of one of the worst recessions in our nations history. First few years went into righting the ship and healthcare.

Priorities? Interesting concept, Slade! If you were truly concerned with "righting the ship" from one of the worst recessions in the nation's history...then why would you spend the bulk of your time passing a healthcare bill that caused so much uncertainty that it hampered economic recovery? Especially a healthcare bill that you deliberately designed to fail?

Well healthcare wasn’t their immediate focus, you can go back at learn the history yourself but there was a series of actions taken to pull this country out of the recession and put us on a recovery pathway that has now lead to historical lows in unemployement and recording breaking stock market.

I'm a history major, Slade and I remember recent history rather well, thank you! Healthcare WAS an immediate focus for them...starting early in 2009.

Great then you tell me, was healthcare their only focus or did they work on other efforts? Which ones?

 

[Toddsterpatriot]

A tax cut that didn't actually cut taxes.

How so? Would manufacturing companies not see a tax cut from 38% to 25%? I believe they would

Remember a similar analysis scored Trumps tax plan at adding trillion to the deficit. Doesn’t a revenue neutral plan sound a little better to you?

The Senate’s Official Scorekeeper Says the Republican Tax Plan Would Add $1 Trillion to the Deficit

How so?

From your own link.....again

In the long-term, the plan is revenue-neutral – savings from closing some corporate tax loopholes

It is not revenue neutral. Paul Ryan said he could get the rate down to 25% based on the tax loopholes that they had agreed to. It got down to 21% by taking money from individuals.

It is not revenue neutral. Paul Ryan said......

We're talking about Obama's "tax cut".

It got down to 21% by taking money from individuals.

How does the corporate tax cut take money from individuals?

The idea of corporate tax reform is that you get rid of business tax breaks. Paul Ryan said he could only get the rate down to 25% with the loopholes that were being closed. They got the money to lower it to 21% by not indexing the standard deduction to inflation. That is a backdoor tax increase as the deduction is worth less each year. Also the tax brackets are indexed to chained inflation rather than the standard CPI. This means people will be pushed into a higher tax bracket which is another backdoor tax increase. Also the mandate was projected to save $300 billion. That comes from people being kicked off of their health insurance. The rate should be at 25% unless Republicans can find more business tax breaks to end.

The idea of corporate tax reform is that you get rid of business tax breaks.

Which "tax breaks" do you want to get rid of?

They got the money to lower it to 21% by not indexing the standard deduction to inflation.

You're mistaken. The deductions are still indexed for inflation.

Also the mandate was projected to save $300 billion. That comes from people being kicked off of their health insurance.

Nobody is getting kicked off.

 

[Flopper]

They could bring it back at 21% where previously it was 35%.

Actually, the tax-cut bill established a one-time special repatriation rate of 13.5% for American money parked overseas, which is why so much of it is now coming back.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

The new corporate tax rate is not graduated at all. It is a flat rate. So there is no longer an "effective rate" vs. a "top rate." If you pay corporate income taxes in the U.S., your rate is 21%.

You must be thinking of marginal rates.
The effective tax rate for a corporation is defined as the rate at which its pre-tax profits are taxed. You divide taxes by income before taxes to get effective rate. It is used to determine how effective a corporation avoids taxes. It's also useful in comparing the effect of taxes on profits in various countries or industries.
Effective Tax Rate

 

[Flopper]

Contrary to what has been reported in the media, large corporation will bring profits back to use without a large tax incentive,(15% or 8%). By reducing rates to 21% a lot of profits will come back. Will there be enough move back to the US to make up the loss in revenue (between 21% and 15% or 8%). Maybe, maybe not. Most decisions to move profits back to US will depend on the profitability there vs hear. It's not just a tax decision.

Congress did something very similar in 2004, offering companies a one-time "repatriation holiday" where they could bring back earnings and face a tax of only 5.25 percent, about a seventh of the normal 35 percent rate. The hope was that this money would then be invested in job-creating business activities in the US. But that’s not what happened: The top companies repatriating earnings actually shed jobs over the next few years, and the funds were mostly funneled to shareholders in the form of higher dividends and more stock buybacks. That helps wealthy stock owners, but not the overall economy.
The tax bill is a giant permission slip for shipping profits overseas

What the 2004 repatriation holiday showed quite clearly, Flopper is that even if you give corporations the ability to bring money into the US at a lower tax rate they will not invest said money to create new jobs if conditions don't warrant it. The bulk of repatriated monies brought into the country were by large "mature" corporations with little room to grow. The management of many of those companies were planning to downsize obsolete jobs before the repatriation holiday and the ability to bring in cash at a lower taxed rate did not change those plans.

I'm still baffled by your claim that there will be a loss of revenue granting tax relief to monies held overseas. How can you lose something that you're not getting in the first place?

Maybe I didn't make myself clear. Without the repatriation clause, corporation will bring money back at the 21% rate. By adding the incentive of a rate as low 8%, corporations will not bring the money at 21% but 8% and that is tax revenue loss for those corporations that would have brought the money back at 21%.

Read the reparation clause from the law, "As a transition to the new regime, deemed repatriation of previously untaxed “old earnings.” A 15.5% rate applies to earnings attributable to liquid assets and an 8% rate applies to earnings attributable to illiquid assets" There is nothing in the law saying how these funds can be used. Although we hope they will find their way into business expansions that will lead to substantial job growth, it seems quite likely that a lot of those funds will end up in stock buy backs, dividends to stockholders, and investments in non-labor intensive business expansions.
https://home.kpmg.com/content/dam/kpmg/us/pdf/2017/12/tnf-new-tax-law-dec22-2017.pdf

But without the repatriation clause, what's the incentive to bring the revenue back at all?

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

 

[Toddsterpatriot]

What the 2004 repatriation holiday showed quite clearly, Flopper is that even if you give corporations the ability to bring money into the US at a lower tax rate they will not invest said money to create new jobs if conditions don't warrant it. The bulk of repatriated monies brought into the country were by large "mature" corporations with little room to grow. The management of many of those companies were planning to downsize obsolete jobs before the repatriation holiday and the ability to bring in cash at a lower taxed rate did not change those plans.

I'm still baffled by your claim that there will be a loss of revenue granting tax relief to monies held overseas. How can you lose something that you're not getting in the first place?

Maybe I didn't make myself clear. Without the repatriation clause, corporation will bring money back at the 21% rate. By adding the incentive of a rate as low 8%, corporations will not bring the money at 21% but 8% and that is tax revenue loss for those corporations that would have brought the money back at 21%.

Read the reparation clause from the law, "As a transition to the new regime, deemed repatriation of previously untaxed “old earnings.” A 15.5% rate applies to earnings attributable to liquid assets and an 8% rate applies to earnings attributable to illiquid assets" There is nothing in the law saying how these funds can be used. Although we hope they will find their way into business expansions that will lead to substantial job growth, it seems quite likely that a lot of those funds will end up in stock buy backs, dividends to stockholders, and investments in non-labor intensive business expansions.
https://home.kpmg.com/content/dam/kpmg/us/pdf/2017/12/tnf-new-tax-law-dec22-2017.pdf

But without the repatriation clause, what's the incentive to bring the revenue back at all?

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

 

[Slade3200]

Maybe I didn't make myself clear. Without the repatriation clause, corporation will bring money back at the 21% rate. By adding the incentive of a rate as low 8%, corporations will not bring the money at 21% but 8% and that is tax revenue loss for those corporations that would have brought the money back at 21%.

Read the reparation clause from the law, "As a transition to the new regime, deemed repatriation of previously untaxed “old earnings.” A 15.5% rate applies to earnings attributable to liquid assets and an 8% rate applies to earnings attributable to illiquid assets" There is nothing in the law saying how these funds can be used. Although we hope they will find their way into business expansions that will lead to substantial job growth, it seems quite likely that a lot of those funds will end up in stock buy backs, dividends to stockholders, and investments in non-labor intensive business expansions.
https://home.kpmg.com/content/dam/kpmg/us/pdf/2017/12/tnf-new-tax-law-dec22-2017.pdf

But without the repatriation clause, what's the incentive to bring the revenue back at all?

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

Yet again you are misinformed. Statutory tax rate is the rate defined by law. Effective is the actual rate paid after credits and deductions are applied. Most often it is significantly less than the statutory rate. True the statstory rate is applied on the taxable income, so cost of goods sold and business expenses are deducted before that rate is applied, however there are many other deductions and loopholes that lower the effective rate that one pays, especially for businesses.

What Is the Difference Between the Statutory and Effective Tax Rate?

 

[Toddsterpatriot]

But without the repatriation clause, what's the incentive to bring the revenue back at all?

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

Yet again you are misinformed. Statutory tax rate is the rate defined by law. Effective is the actual rate paid after credits and deductions are applied. Most often it is significantly less than the statutory rate. True the statstory rate is applied on the taxable income, so cost of goods sold and business expenses are deducted before that rate is applied, however there are many other deductions and loopholes that lower the effective rate that one pays, especially for businesses.

What Is the Difference Between the Statutory and Effective Tax Rate?

Statutory tax rate is the rate defined by law.

Yup. For a business, the statutory rate used to be 35% of profit. Not 35% of revenue.
So to point to, for instance, WalMart, with revenue of $486 billion in the FY ending Jan 2017, which paid $6.2 billion in income tax and say their effective rate is 1.28% is silly.

Effective is the actual rate paid after credits and deductions are applied.

To determine profit you have to deduct Cost of Goods Sold and Operating expense (salaries, etc) to get net income. Then they deduct interest expense to get their income before tax of $20.497 billion.

however there are many other deductions and loopholes that lower the effective rate that one pays,

Depreciation is an expense. And in the case of a multinational, the lower rates paid in other countries are blended into the 35% charged here to make their rate look "unfairly" lower.

WMT Income Statement | Walmart Inc. Stock - Yahoo Finance

 

[deanrd]

A few days ago, Senator Chuck Schumer and other leading Senate Democrats held a press conference to present their infrastructure and tax reform plan. The full title of the bill is SENATE DEMOCRATS' JOBS & INFRASTRUCTURE PLAN FOR AMERICA’S WORKERS: RETURNING THE REPUBLICAN TAX GIVEAWAYS FOR THE WEALTHY TO THE AMERICAN PEOPLE.

The Dem plan is actually pretty good. It is only a tax-hike measure compared to the new tax rates under the Trump tax cuts. Compared to the tax rates that existed until last year, it calls for huge tax cuts, even for corporations, in spite of the bill's unfortunately partisan subtitle. If Hillary had proposed this plan during the election, Bernie supporters and other Dems would have skewered her for wanting to "give away hundreds of billions of dollars to the rich." Consider:

* The Dem plan would set the corporate income tax rate at 25%. This is 4 percentage points higher than the Trump rate of 21%, but it's 10 percentage points lower than what the rate was last year and for decades before that. When Mitt Romney proposed cutting the corporate tax rate to 25% in 2012, Dems attacked the idea as a "tax cut for the rich."

* The Dem plan would leave intact all of the Trump tax cuts for personal income taxes, with the sole exception of the top marginal rate, which would go back to the previous rate of 39.6%, which would still be lower than it was for most of Reagan's presidency. Moreover, the Dem plan would maintain the Trump threshold of $600K for the top bracket.

* As mentioned, the Dem plan would keep *all* of the massive Trump tax cuts for the middle-income brackets. It would also maintain the Trump tax-cut provisions of capping SALT deductions at $10K and of capping mortgage-interest deductions.

* The Dem plan would return the death tax (the estate tax) to 2017 levels, which were an improvement over the rates for most of the previous four decades, and it would also return to the previous GOP-backed threshold of $5.49 million for exemption from the tax (vs. $11 million under the Trump tax cuts).

* The Dem plan would bring back the AMT, a very bad, baffling move. But, the AMT only affected people who made over 120K (single)/160K (married), and it did not really bite anyone until they started making over $300K, and even then the bite was not draconian.

* The Dem plan would leave intact Trump's special repatriation rate of 13.5% for American corporate money parked overseas that is brought back to the U.S.

* The Dem plan would close the carried-interest loophole, something that should have been done with the Trump tax cuts.

* The Dem plan would use the assumed savings vs. the Trump tax cuts to fund $1 trillion in infrastructure spending, and even most conservative think tanks agree that infrastructure spending usually largely pays for itself and sometimes gives us a large net gain. Trump has called for at least $1.6 trillion in infrastructure spending.

The Dem plan is not bad at all, but it is not as good as the Trump tax-cut bill and the Trump infrastructure-spending proposal. The Dem plan is a non-starter as long as the GOP controls the Senate, but it is really a pretty good plan.

Full text of the bill:
https://www.democrats.senate.gov/imo/media/doc/Senate Democrats' Jobs and Infrastructure Plan.pdf

Executive summary of the bill:
https://www.democrats.senate.gov/imo/media/doc/Senate Democrats' Jobs and Infrastructure Plan One Pager.pdf

I don't see the parts where they talked about roads and bridges and job training and education. Those are the most important parts.

 

[deanrd]

I say, let the Dems run on raising taxes.

The Dem plan would be a big improvement over the 2017 tax rates, but it would not be as beneficial and pro-growth as the Trump tax cuts and Trump's infrastructure proposal. And, yes, Dems would have to run on imposing a modest tax hike on corporations and on people in the top marginal income tax bracket. But they could also say, "Look, we wanna cut the corporate income rate as well, but just not by quite as much, and we're not gonna touch the middle-class tax cuts."

If Trump's tax cuts and infrastructure proposals are superior to the Dems plan, and they are.....why even consider the Democrat's plan? It's not even their plan. It's a modified Trump plan that Dems would never have considered in a million years. Plus, you can't trust Democrats to actually do what they say they will do.
Don't vote Democrat....they suck!

Where is Trump's plan and how will it be paid for?
If it's so superior, prove it.

 

[Slade3200]

They could bring it back at 21% where previously it was 35%.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate. The average effective rate under the old law for all corporations was about 20% and 12.9% for large corporation. Under the new law the average will be around 15% and 6 to 7% for large corporations. So how do those rates effect repatriation? Whether a country moves old profits to the US will be determined based on the anticipated return and effective tax rate in the two countries, and the reparation rate. There is no way to determine how effective the reparation will be in bringing profits by to America much lest jobs.

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

Yet again you are misinformed. Statutory tax rate is the rate defined by law. Effective is the actual rate paid after credits and deductions are applied. Most often it is significantly less than the statutory rate. True the statstory rate is applied on the taxable income, so cost of goods sold and business expenses are deducted before that rate is applied, however there are many other deductions and loopholes that lower the effective rate that one pays, especially for businesses.

What Is the Difference Between the Statutory and Effective Tax Rate?

Statutory tax rate is the rate defined by law.

Yup. For a business, the statutory rate used to be 35% of profit. Not 35% of revenue.
So to point to, for instance, WalMart, with revenue of $486 billion in the FY ending Jan 2017, which paid $6.2 billion in income tax and say their effective rate is 1.28% is silly.

Effective is the actual rate paid after credits and deductions are applied.

To determine profit you have to deduct Cost of Goods Sold and Operating expense (salaries, etc) to get net income. Then they deduct interest expense to get their income before tax of $20.497 billion.

however there are many other deductions and loopholes that lower the effective rate that one pays,

Depreciation is an expense. And in the case of a multinational, the lower rates paid in other countries are blended into the 35% charged here to make their rate look "unfairly" lower.

WMT Income Statement | Walmart Inc. Stock - Yahoo Finance

You are leaving out the loopholes in our tax code that allow many Fortune 500 companies who make 100s of billions of dollars to pay next to nothing in taxes. For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss. Then there are the subsidies and many other tax dodging techniques that companies use. I believe the 35% statutory rate had an actual effective tax rate of around 21% for the top American corporations.

 

[Toddsterpatriot]

What's important is not really the top rates but rather what percent the tax is of a corporation's pre-tax income, the effective rate.

Can you explain why the effective rate is ever below the statutory rate?

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

Yet again you are misinformed. Statutory tax rate is the rate defined by law. Effective is the actual rate paid after credits and deductions are applied. Most often it is significantly less than the statutory rate. True the statstory rate is applied on the taxable income, so cost of goods sold and business expenses are deducted before that rate is applied, however there are many other deductions and loopholes that lower the effective rate that one pays, especially for businesses.

What Is the Difference Between the Statutory and Effective Tax Rate?

Statutory tax rate is the rate defined by law.

Yup. For a business, the statutory rate used to be 35% of profit. Not 35% of revenue.
So to point to, for instance, WalMart, with revenue of $486 billion in the FY ending Jan 2017, which paid $6.2 billion in income tax and say their effective rate is 1.28% is silly.

Effective is the actual rate paid after credits and deductions are applied.

To determine profit you have to deduct Cost of Goods Sold and Operating expense (salaries, etc) to get net income. Then they deduct interest expense to get their income before tax of $20.497 billion.

however there are many other deductions and loopholes that lower the effective rate that one pays,

Depreciation is an expense. And in the case of a multinational, the lower rates paid in other countries are blended into the 35% charged here to make their rate look "unfairly" lower.

WMT Income Statement | Walmart Inc. Stock - Yahoo Finance

You are leaving out the loopholes in our tax code that allow many Fortune 500 companies who make 100s of billions of dollars to pay next to nothing in taxes. For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss. Then there are the subsidies and many other tax dodging techniques that companies use. I believe the 35% statutory rate had an actual effective tax rate of around 21% for the top American corporations.

For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss.

Yeah, Clinton really stuck it to those companies, eh?

So Exxon deducts $100 million for stock options and the top dogs pay taxes on $100 million. Awful!

Then there are the subsidies and many other tax dodging techniques that companies use.

I agree, all the stupid "green energy" subsidies need to die.

 

[Slade3200]

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions. Then there are those that are questionable such deduction for reinvesting profits in the business, intangible drilling costs, etc. And then there are those tax credits and deductions for effective lobbying.

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

Yet again you are misinformed. Statutory tax rate is the rate defined by law. Effective is the actual rate paid after credits and deductions are applied. Most often it is significantly less than the statutory rate. True the statstory rate is applied on the taxable income, so cost of goods sold and business expenses are deducted before that rate is applied, however there are many other deductions and loopholes that lower the effective rate that one pays, especially for businesses.

What Is the Difference Between the Statutory and Effective Tax Rate?

Statutory tax rate is the rate defined by law.

Yup. For a business, the statutory rate used to be 35% of profit. Not 35% of revenue.
So to point to, for instance, WalMart, with revenue of $486 billion in the FY ending Jan 2017, which paid $6.2 billion in income tax and say their effective rate is 1.28% is silly.

Effective is the actual rate paid after credits and deductions are applied.

To determine profit you have to deduct Cost of Goods Sold and Operating expense (salaries, etc) to get net income. Then they deduct interest expense to get their income before tax of $20.497 billion.

however there are many other deductions and loopholes that lower the effective rate that one pays,

Depreciation is an expense. And in the case of a multinational, the lower rates paid in other countries are blended into the 35% charged here to make their rate look "unfairly" lower.

WMT Income Statement | Walmart Inc. Stock - Yahoo Finance

You are leaving out the loopholes in our tax code that allow many Fortune 500 companies who make 100s of billions of dollars to pay next to nothing in taxes. For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss. Then there are the subsidies and many other tax dodging techniques that companies use. I believe the 35% statutory rate had an actual effective tax rate of around 21% for the top American corporations.

For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss.

Yeah, Clinton really stuck it to those companies, eh?

So Exxon deducts $100 million for stock options and the top dogs pay taxes on $100 million. Awful!

Then there are the subsidies and many other tax dodging techniques that companies use.

I agree, all the stupid "green energy" subsidies need to die.

Oh I get it now, Clinton sucks and the Dems are destroying America. Thanks so much for enlightening me.

Do you ever get dizzy from all the spin?

 

[Toddsterpatriot]

The effective rate is always lower than the statutory rate because the business is allowed to deduct from gross revenues the costs of production such as the cost of goods sold, cost of labor, rents, interest, etc, all quite legitimate deductions.

The statutory rate is only charged after those deductions. Saying that the effective rate is lower, because of those deductions is silly.

Yet again you are misinformed. Statutory tax rate is the rate defined by law. Effective is the actual rate paid after credits and deductions are applied. Most often it is significantly less than the statutory rate. True the statstory rate is applied on the taxable income, so cost of goods sold and business expenses are deducted before that rate is applied, however there are many other deductions and loopholes that lower the effective rate that one pays, especially for businesses.

What Is the Difference Between the Statutory and Effective Tax Rate?

Statutory tax rate is the rate defined by law.

Yup. For a business, the statutory rate used to be 35% of profit. Not 35% of revenue.
So to point to, for instance, WalMart, with revenue of $486 billion in the FY ending Jan 2017, which paid $6.2 billion in income tax and say their effective rate is 1.28% is silly.

Effective is the actual rate paid after credits and deductions are applied.

To determine profit you have to deduct Cost of Goods Sold and Operating expense (salaries, etc) to get net income. Then they deduct interest expense to get their income before tax of $20.497 billion.

however there are many other deductions and loopholes that lower the effective rate that one pays,

Depreciation is an expense. And in the case of a multinational, the lower rates paid in other countries are blended into the 35% charged here to make their rate look "unfairly" lower.

WMT Income Statement | Walmart Inc. Stock - Yahoo Finance

You are leaving out the loopholes in our tax code that allow many Fortune 500 companies who make 100s of billions of dollars to pay next to nothing in taxes. For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss. Then there are the subsidies and many other tax dodging techniques that companies use. I believe the 35% statutory rate had an actual effective tax rate of around 21% for the top American corporations.

For example when Facebook and Exxon saved billions in taxes by giving options to the top dogs to buy discounted stock in the future and then they company can deduct these payouts as a loss.

Yeah, Clinton really stuck it to those companies, eh?

So Exxon deducts $100 million for stock options and the top dogs pay taxes on $100 million. Awful!

Then there are the subsidies and many other tax dodging techniques that companies use.

I agree, all the stupid "green energy" subsidies need to die.

Oh I get it now, Clinton sucks and the Dems are destroying America. Thanks so much for enlightening me.

Do you ever get dizzy from all the spin?

Oh I get it now, Clinton sucks

Clinton made executive salary over $1 million, non-deductible.
To punish corporations and their rich executives.........I guess.

Do you think things worked out like he planned? LOL!

and the Dems are destroying America.

Well, their idiocy sure isn't helping things.

Do you ever get dizzy from all the spin?

I never tire of highlighting your confusion.