Will President Biden Scrap GILTI?
Will President Biden Scrap GILTI?
Congratulations to Brad Setser for being selected to be the Agency Review Team for the Office of the United States Trade Representative. I’m curious, however, as to his views on certain aspects of President Elect’s proposals with respect to corporate taxation. There were lots to criticize as to the 2017 Tax Cuts and Jobs Act. Conservative economists were correct to note that it made corporation taxation more complicated. Progressives objected to the dramatic reduction in corporate tax rates. Biden wants the statutory rate raised to 28%.
He also is not happy with certain aspects of the Global Intangible Low-Tax Income (GILTI) provisions. Brad Setser ties trade policy and international taxation in a post that brings up transfer pricing abuse. The Cliff Notes version of his insights is that Big Pharma may source production of these new coronavirus treatments in places like Ireland so that they can abuse transfer pricing to make sure their high profits face low tax rates even if the patient is American. My understanding of all that BEAT, FDII, and GILTI jazz was to shore up transfer pricing enforcement by complex legal schemes. Conservatives can rightfully complain that all these legal complications make compliance by multinationals just trying to pay their fair share of taxes very costly. Progressives will note that the large multinationals who want to avoid US taxes find clever means around these silly rules.
And to add to our woes – these bizarre rules frustrate our allies abroad who will respond with their own complex rules both in trade and tax issues. Maybe a simple idea might be for all parties involved including our foreign allies to sit down and scrap this legalese and simply get back to enforcing the arm’s length standard using sound economic principles. Just saying.
(Dan here…lightly edited for readability)
This is just a ‘tease.’ I hope this site will dive in deeper. Our tax code has been totally compromised over the past 4 decades.
Dan – thanks for the light editing. I’m not sure what is going on with the Econospeak blogger editing tools but I feel totally hamstringed with what I cannot do there.
Christopher – you are right. It is just a tease. Maybe I should beg to be placed among the Angrybears again, which have been very generous by putting our Econospeak posts up here. I could write a few more timely posts on this important issue now that we are about to have a President who actually cares.
I can help you also. Dan gets pretty busy also.
If you want, you are welcome to write here. I need a valid e-mail address. Should you wish to, send to my personal e-mail. Dan
complex legal schemes. Conservatives can rightfully complain that all these legal complications
Simplicity is the true meaning of life.
~~Occham’s 1st postulate~
complexity is more likely to mire you into a tangle of complications than is simplicity.
~~O’Grady the Great~
Don’t tax :
3. Capital gains
Tax this :
1. Imports from foreign and American companies
2. Real property
3. dividends and distributions
Regulate this :
1. Maximum wage
do you see how this works? we get to tax the foreigners who own land in this country but we don’t tax the money they invest into our industries that generate jobs for our workers. Our workers can buy homes cheaper because the prices aren’t to be bid up by Foreign Real Estate Investors.
Linus torvald has proved that Simplicity is more robust than complexity. this is probably true of both the Linux kernel and our economy.