Will New Corporate Tax Plans Hurt the U.S. in the End?
The winds of change are blowing when it comes to taxes and corporate taxes are no exception. President Trump and the House are both ready to lower the corporate tax rate in an effort to create a more business friendly environment for U.S. companies here in the states. Currently, the corporate tax system is a mess, which is why so many large companies keep so much of their earnings overseas, and that costs the U.S. billions in tax revenue.
The basic premise behind the current administration’s plan is to change the current model of tax on the return to capital into a model that taxes only extraordinary profits. The plan would do this by taxing corporate cash flows. The plan would make three major changes to accomplish this.
Number one, any investment outlays would not have to be depreciated over time, but instead they could be written off during the same year they were undertaken. The next major change would make interest payments to creditors non-tax-deductible. Lastly, in order to continue to promote our county’s competitiveness with the rest of the world, corporations would not have to include export receipts when they calculate their taxable income. On the other hand, they would not be allowed to deduct from their income payments to foreign affiliates and suppliers.
However, there are some who feel this plan could be very detrimental to our nation’s economy in the long run. The first problem is that the change could increase income inequality even more between the wealthy the rest of the country. The tax change could also increase uncertainty, put additional burdens on certain sectors and cause a volatile redistribution of income. The tax change could also hurt the global economy, according to some circles and the long-term of cost of making this tax change could end up causing large tax increases or spending reductions.
Of course, there are two sides to every story, so it remains to be seen what changes are made and how they will affect corporations and our nation’s financial well-being.
https://www.nytimes.com/2017/01/07/upshot/the-major-potential-impact-of-a-corporate-tax-overhaul.html?_r=0
https://www.washingtonpost.com/opinions/trump-and-ryan-are-right-to-tackle-corporate-taxes-but-their-approach-would-do-harm/2017/01/08/e7abd204-d429-11e6-9cb0-54ab630851e8_story.html?utm_term=.fd3e2b28a833
Business in New York Being Buried by Heavy Tax Load
New York, New York: It’s the town so nice they named it twice. But when it comes to taxes in one of the world’s greatest states, things aren’t so nice. That’s because New York is one of the worst places to live if you don’t want to pay a lot of taxes. New York has…
Thinking About Loaning Cash to Your Business?
Are you looking to start a business, or is your current business in need of some cash? Maybe you can’t get a loan from a bank, or maybe you would rather not use a bank. What about lending some of your own money to your company? Can you do that? Yes, you can, but you’ll…
Which Tax Extensions Will Affect Your 2014 Return?
Are You Ready for Your 2014 Taxes? Although many people might answer yes to that question, the fact is taxpayers can only do so much as long as Congress is dragging its feet on several expired tax extenders. The fact that these extenders are still sitting in limbo is nothing new. It happens almost every…
So-Called Temporary Recession Tax Not So Temporary
Remember the great recession of 2009? Although the recession may now be a thing of the past, some so-called “temporary” taxes are having a harder time fading into the background. That’s because many states throughout the country are still collecting on tax bills that were enacted solely for the purpose of refilling public reserves. Fourteen…