Dec 17, 2017

Tax plan could push assembly lines abroad

The Capitol dome, silhouetted by the rising sun. Photo: Carolyn Kaster / AP

Tax experts say the new legislation "fails to eliminate long-standing incentives for companies to move overseas and, in some cases, may even increase them," the WashPost's David J. Lynch writes in the Business section lead:

Why it matters: "As a candidate, Trump vowed to stop companies from moving offshore ... But presidential jawboning has been no match for the market."

What's changing: "Under current law, the 35% corporate tax is due on profit earned overseas only when it is returned stateside. The legislation ... would permit the estimated $2.6 trillion that corporations have stockpiled outside the country to return to the United States subject to a rate expected to be around 15%."

  • "In the future, corporations would be required to pay about a 10% minimum tax on overseas income above a certain level. The provision is billed as a way to discourage the movement of jobs and profit overseas."

But the fine print of the new global minimum tax could make the problem worse for three reasons, nonpartisan tax specialists said:

  1. "[A] corporation would pay global minimum tax only on profit above a 'routine' rate of return on the tangible assets — such as factories — it has overseas. So the more equipment a corporation has in other countries, the more tax-free income it can earn."
  2. "[T]he bill sets the 'routine' return at [a generous] 10% ... Such allowances are normally fixed a couple of percentage points above risk-free Treasury yields, ... currently around 2.4%."
  3. "[T]he minimum levy would be calculated on a global average rather than for individual countries where a corporation operates. So a U.S. multinational could lower its tax bill by shifting profit from U.S. locations to tax havens such as the Cayman Islands."

Be smart: The new law will include lots of what you might call unintended consequences — although often they were intended by the hidden hands that put them there.

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The growing coronavirus recession threat

Illustration: Aïda Amer/Axios

In just a matter of weeks, top economists and investment bank analysts have gone from expecting the coronavirus outbreak to have minimal impact on the U.S. economy to warning that an outright recession may be on the horizon.

What's happening: The spread of confirmed coronavirus cases in Europe, the Middle East and the U.S., and the speed at which they are being discovered has set the table for the outbreak to have a larger and much costlier impact.

Mass shooting in Milwaukee: What we know

Milwaukee Mayor Tom Barrett in 2012. Photo: John Gress/Corbis via Getty Images

Six people died in a shooting at the Molson Coors Brewing Company in Milwaukee on Wednesday, including the gunman, Mayor Tom Barrett told reporters at a Wednesday evening press conference with local police.

Details: All of the victims worked at the brewery complex, as did the shooter who died of "an apparent self-inflicted gunshot wound," police confirmed in a statement late Wednesday.

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Coronavirus updates: South Korea case count tops 2,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

33 people in California have tested positive for the coronavirus, and health officials are monitoring 8,400 people who have recently returned from "points of concern," Gov. Gavin Newsom said Thursday.

The big picture: COVID-19 has killed more than 2,850 people and infected over 83,000 others in some 50 countries and territories. The novel coronavirus is now affecting every continent but Antarctica, and the WHO said Wednesday the number of new cases reported outside China has exceeded those inside the country for the first time.

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