Lobbyists push for deeper US tax cuts
Major US multinationals are pushing the Trump administration to deepen the tax break it has already tentatively proposed on $2.6 trillion in corporate profits being held offshore, a key piece in Washington's intricate tax reform puzzle.
As President Donald Trump tries to deliver on his campaign promise to overhaul the tax code, lobbyists for technology, drug and other manufacturers are working with officials behind closed doors, six lobbyists working with various industries told Reuters.
The lobbyists said they are telling the White House and Treasury Department that if companies are forced to bring home, or repatriate, foreign earnings, they want a sharply reduced tax rate.
The lobbyists are making an aggressive case that cutting the tax rate on offshore profits to 10pc from 35pc, as the administration has indicated it may favour, is not enough.
Rather, the lobbyists said they want a lower, bifurcated rate of 3.5pc on earnings already invested abroad in illiquid assets, such as factories, and 8.75pc on cash and liquid assets.
That would favour Ireland where firms have real, working assets rather than just cash.
During the 2016 presidential campaign, Trump proposed setting the rate at 10pc, and argued it could be used to raise tax revenue to pay for tax cuts or infrastructure.
Discussion of hard numbers in the long-running repatriation debate may indicate tax reform is advancing on Trump's slow-moving domestic policy agenda. Or it may just be lobbyists trying to set the early framework for a long slog ahead.
"For us, it's how you create a tax environment where you give business long-term certainty," one lobbyist said.
The changes being discussed are part of larger tax reform, another lobbyist said: "Our international tax system is out of whack with the rest of the world. This system is not sustainable."
Repatriation and comprehensive tax reform are important to the economy, Apple CEO Tim Cook said earlier this month on CNBC. "The administration ... they're really getting this and want to bring this back and I hope that that comes to pass," he said.
US-based corporations are supposed to pay 35pc income tax on profits worldwide. But companies can defer that tax on active profits left outside the country.
That incentivises multinationals to park profits offshore. About $2.6 trillion is being held overseas by more than 500 US companies, according to research firm Audit Analytics.
Nearly a third of that is held by just 10 companies, including Apple, Microsoft, Pfizer and General Electric, the firm said. (Reuters)