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US Treasury Discusses Cuts to Overseas Taxes

September 23rd

treasury and taxesPresently under discussion with the US Treasury Department is a proposal to eliminate a portion of the taxes levied on overseas profits of American multinational companies. The proposal is a key component in a plan to conduct a general overhaul of the corporate tax code.

In the past, the subject of corporate tax has been a hot topic of debate. US businesses have been consistently pushing for exemption for all overseas earnings from US taxes, arguing that the current system places them at a disadvantage in the global market. Republicans and the businesses they support could be disappointed with the proposed plan, in that it does not go further and eliminate all overseas tax.

Meanwhile, liberals and trade unions have suggested that cutting taxes on overseas income could mean that US business will simply shift more operations and labor overseas. Many feel upset over the amount of unpaid taxes already accrued by American businesses under the current system.

Components of the Plan

The current proposal would create what is referred to as a “rough” territorial system. This system would serve to shelter a certain amount of overseas profits from US taxes. One of the primary issues under discussion at present is which profits would warrant exclusion.

The tax-cut provision is part of a broader plan to restructure the tax code, by simplifying laws and eliminating loopholes. The proposed rewrite could have significant implications for US corporations. Notably, the plan is expected to include a substantial cut from the current 35 percent corporate tax rate, as well as changes to various key tax deductions.

 
 
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