Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock

“For business, the most important postelection question is simple: Will there be corporate-tax reform or not?” Dennis K. Berman reports for The Wall Street Journal. “Top lawmakers in Washington are talking about a nine-month ‘window’ to make a deal. The nine months is a political marker, the interval in which both sides might have at least some repose before the tumult of the 2016 election begins.”

“Listen to the words of Paul Ryan, who just might be the future chairman of the House Ways and Means Committee: ‘If I could make just one change in Washington, it would be to fix the tax code,'” Berman reports. “Republicans are attached to ‘comprehensive tax reform’ which typically means overhauling much of the approach to personal taxes, including those for small business. For Democrats this amounts to tax cuts for the wealthy, a nonstarter. Expect Democrats to be focused on the ever-divisive question of ‘territoriality,’ another way of saying that overseas profits are taxed in their country of origin, not by the U.S.”

“Chief executives have been consistently pressing for change, especially in light of the corporate ‘inversions’ that are relocating U.S. companies—and their tax dollars—abroad,” Berman reports. “They rightfully point out that inversions are a symptom, not a cause, of a system that encourages overseas profits never to make their way back home.”

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

Berman reports, “The odds of tax reform could well increase if the Republicans take the Senate. ‘That moves the game from whether Congress could produce a unified proposal to whether Congress and the president are interested in striking a bargain,’ says Linda Swartz, who chairs the tax group at law firm Cadwalader. ‘I suspect the president is, and the Senate is. I’m less certain whether the Senate can deliver the House.'”

Read more in the full article here.

Related articles:
U.S. Democrats press for a crackdown against corporate tax deals – July 17, 2014
Rupert Murdoch criticizes excessive regulation, corporate tax policy for stymieing G20 growth – July 17, 2014
EU’s investigation of Apple’s taxes isn’t going to cause the company any problems – June 13, 2014
U.S. SEC ends review of Apple taxes, overseas cash – October 5, 2013
Obama, world leaders push big companies like Apple, Google to pay more taxes – September 6, 2013

108 Comments

  1. My prediction is that little will change. What will occur will be a pretty large increase in scandals and corruption being exposed. Republicans are unlikely to win on a national scale, their ideas are just too idiotic, at least the ones they are still regurgitating. Mostly they’re just about blaming everyone else for the situations they cause. That’s why they’re called the party of personal responsibility. That’s why they’re pro-life by being for the death penalty, patriotic by undermining the constitution, anti-government by creating massively intrusive government programs, and pro freedom by working towards a police state.

        1. The Senate and House of Representatives are actually part of the federal government, not local governments. So it’s national in that respect.

          Also, even if the election was just for local governments and not the federal positions (which wasn’t the case), winning many state government positions all over the country is still a nationwide electoral win, as the country is still very much a collection of states.

    1. Except the article’s actual content is very rightwing… and it’s actually from the Wall Street Journal…. and that publication is known to have rightwing bias … and Time is not even that leftist, having vigorously supported Bush’s invasion of Iraq…. Why am I bothering to correct you though? You’ve made so many wrong assertions in a one line comment, you’re probably too willfully stupid to comprehend anything I am saying. Just go home and watch Fox News or something, hapless douchebag.

  2. Republican Wave Sweeps GOP to Senate Takeover, Record House Gains

    Republicans scored historic political victories Tuesday by seizing the U.S. Senate, expanding their majority in the House to near-record proportions, and winning several key governor races.

    It was a much faster and far more sweeping result than even the most optimistic Republicans expected.

    In some circles, the reaction to the depth of Democrats’ electoral drubbing bordered on shock.

    It’s been a generation since Republicans scored such a stunning Senate sweep. Tuesday’s election marked the largest net swing of Senate seats toward Republicans since the Reagan-led landslide of 1980.

    “There will be nine seats most likely at the end of the election process,” Democratic analyst and pollster Doug Schoen said. “A complete repudiation of Obama. It’s not really a mandate for the Republicans, but it is a rejection of Obama’s economic policies, his fight against Ebola.”

    The results also reinvigorated the grassroots tea party movement, said several activists.

    “Tonight is a big win for the tea party and for tea party values,” said Jenny Beth Martin, co-founder of the Tea Party Patriots. “The candidates who won around the country and in the Senate did because the candidates were talking about how to solve our economic problems, about the problems with Obamacare and how to restore healthcare freedom in our country, and also talking about how to stop executive amnesty and the amnesty of illegal immigrants.

    “These are the issues tea party people care about and they resonated with voters,” she said.

    With GOP gubernatorial wins in key states such as Wisconsin, Georgia and Florida, the GOP sweep is also expected to have major repercussions for the 2016 presidential race. Those states could be a major launching pad for Republican efforts to recapture the White House.

    In retrospect, even the polls indicating that a major GOP wave was building in the election’s closing days failed to anticipate the scale of the stinging rebuke dealt to Democrats and Obama by the voters.

    1. One excellent point on this is that the establishment republicans were able to destroy tea party candidates that didn’t have a chance in the general election. They knew that democrats wouldn’t show up anyway, so even if the tea party stayed home, those republicans would still win.

  3. Yea, so the rich can get richer and the middle class and below can get poorer. Voting the Republicans in just made every middle class and poor class even more so. Thanks a lot!
    Just remember who got us out of the worst Recession, Lowest unemployment, got our gas prices under $3 a gallon, and gave a lot of people healthcare so they could actually see a doctor. OBAMA! That’s the facts! What did the Republicans do, NOTHING! Whine, moan, complain, call Obama names, put the government in financial jeopardy, try to sue him and waste more tax payers money. What they will do next is exactly that. They will try and remove everything Obama put in place and bring the economy back down to its knees again. Again thanks a lot!

  4. If the current rendition of the ‘Republicans’ can create actual, practical business tax reform, then Good On Them!

    But PLEASE don’t go pretending that the ReTardlicans are any less culpable in RUINING my country than the DemoCraps. It’s a duopoly of incompetence, graft and parasitism. To hell with both parties.

    I suspect a similar book will be written about Obama.

  5. I would be in favor of a 0% corporate tax, *IF* we do away with capital gains entirely and treat all personal income as ordinary income, we eliminate the AMT, and we allow medical and other personal deductions from the first dollar without exclusions.

    1. No tax plan is sustainable if it doesn’t fund the spending of the nation. With the USA running deficits for decades now, the party will end and future Americans will have no choice but to shoulder the burden that current and past generations dug for them. The reckless choice to arbitrarily reduce nominal rates and pray for all corporations to suddenly decide to move their factories back from China is just stupid. Labor costs, not tax rates, are what drove short-sighted corporations abroad. To slash nominal tax rates (which isn’t what a well-connected taxpayer actually pays anyway) is a foolish move that would REDUCE tax proceeds.

      How about we instead prioritize the retiring of the national debt? This is something neither corrupt political party has been willing to do since Eisenhower did it in the 50’s (with high taxes, ming you).

      The better tax reform proposal would be something like this:
      1) reduce federal spending in a gradual planned manner, starting with immediate cuts to the biggest programs first (military and three primary forms of welfare: welfare for corporations, welfare for the elderly and disabled, and welfare for deadbeat states). None of that is politically popular but effective cuts can be made if program budgets are capped at 0% growth until balanced budgets are achieved at some date in the future (perhaps 2 presidential terms away).
      2) immediately get to work repealing loopholes and exemptions in all tax code. Lobbyists have made a sham out of what could be a much simpler tax code.
      3) enforce meaningful trade tariffs on nations that employ child labor, pollute, support terrorism, or whatever. Yes, that includes China. this used to be the primary funding mechanism for the nation before the stupid personal income tax was “temporarily” adopted.
      4) only AFTER the national debt is completely eliminated should nominal tax income rates be reduced.
      5) All income taxes (personal and corporate) should be replaced by three wiser incentive taxes: a) taxes on natural resource consumption, b) taxes on pollution, and c) taxes on financial transactions. In this manner, efficient hard workers are rewarded for innovating. Polluters are penalized for messing up the planet. Traders who do nothing but play shell games have to fork over some of their slice of the pie. Everyone pays, no exceptions.
      6) finally, enact two long overdue additions to the Constitution: – a balanced budget mandate and a definition of corporate rights — which should not allow participation in any part of the electoral process.

      1. 1) I agree that we should start by cutting the DoD budget…by about half. The reason we are where we are today is the roughly $10 Trillion we’ve spent in Iraq and Afghanistan over the last 15 years or so. Then we should INCREASE spending for infrastructure. This country is falling apart around us. Welfare for the elderly and disabled? Really? Cutting that is going to somehow balance the budget? Did you really mean to say Social Security instead of welfare? If so, remember that Social Security has never contributed a penny to any deficit. SS pays for itself and more. The surplus, however, has been stolen by congress to feed other programs. I would raise the ceiling on SS taxes to the first $500,000. That would fund SS for the foreseeable future.

        2) Closing all the loopholes would take decades. Just scrap the whole thing and institute a national sales tax. At the same time, repeal all income taxes. Things like housing, food, Rx drugs, and services (labor) would be exempt from sales tax.

        3) Agreed.

        4) Stay with a sales tax and no income tax.

        5) It is an economic truism that you tax what you want to discourage. Do we really want to discourage a) natural resource consumption (manufacturing), b) CO2 “pollution” (manufacturing), and c) financial transactions (commerce)?

        6) Agreed.

        1. regarding #6 – a balance is required. If done properly, the import tariffs should be about the same as the raw material use taxes to make a given product. Reality is that corporations are sitting on so much capital they don’t know what to do with it all. Meanwhile small businesses are getting slaughtered and labor wages in real terms are significantly below the average since WW2, with many workers unable to find full-time employment.. So yes, you can’t get blood from a stone. Corporations will have to ante up some of their profits to right the ship. They have benefitted more than any other entities from the infrastructure and markets that the US government has created — largely because tax law has been gerrymandered in favor of corporate election donors by corrupt politicians of both parties.

      1. No exclusions. Boob jobs included. It’s not like people get boob jobs annually, and who’s to judge whether those and other “cosmetic” surgeries are medically necessary or not (other than the patient and his or her doctor)? You’re too worried about somebody getting away with something to ever accomplish anything significant.

          1. The only satisfaction I got last night, is knowing you, First 2016, and MacDailyNews, have to put up with Cocoa Boy for another two years.
            You slimy, traitorous, racist, guttersnipe.
            Can’t wait great you in hell, and spit in your face in person.

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