Background

A new tax plan announced recently by the Treasury Department seeks to eliminate incentives to offshore investment, reduce profit shifting by multinational corporations, counter tax competition on corporate rates, and provide tax preferences for clean energy production.

Aspects of this plan of interest to those in the trade community include the following.

- repealing a provision in a 2017 law that lowered the tax rate for a portion of U.S. corporations’ export income categorized as foreign-derived intangible income from 21 percent to 13.125 percent

- reversing tax-based incentives for moving production overseas; e.g., terminating the tax exemption for the first 10 percent return on foreign assets, ending the ability of multinationals to shield income in tax havens from U.S. taxes with taxes paid to higher-tax countries, disallowing deductions for the offshoring of production, and implementing “strong guardrails” against corporate inversions

- pursuing a comprehensive agreement with other countries on corporate minimum taxation

- increasing the U.S. corporate tax rate from 21 to 28 percent to generate funds for “fiscal priorities” such as investments in infrastructure, technology, research, and green industries

- increasing tax enforcement resources for the Internal Revenue Service

- removing subsidies for fossil fuel companies and providing incentives to reposition the U.S. as a global leader in clean energy and improve the resilience of U.S. infrastructure

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