President-elect Donald Trump’s tax plan involves cutting taxes for corporations and for the one percent. This has been tried before, Donnie. It didn’t work.
As far as corporate taxes are concerned, he has a $2.6 trillion repatriation proposal.
What Is Repatriation?
Repatriation involves converting money from one currency to another. In the realm of corporate taxes, this involves companies that have sent money and jobs overseas. This tax plan would allow companies to pay less in taxes in this country. The hope is that companies could create more jobs if they are paying less in taxes. Sounds good, right? It’s been tried before and it didn’t work.
Does This Sound Familiar?
President George W Bush tried this plan in 2004, and it failed then. Trump is calling his version of the plan a “tax holiday.” His website says that the plan will:
“… Provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent.”
Corporations currently have to pay 35 percent of their earnings to the government. In theory, the money they save could be used to create more jobs, but there is no way to guarantee this. The companies could just pocket that extra cash.
Dubya reduced it to five percent under his administration back in 2004. The government paid billions of dollars, and companies actually cut 21,000 jobs.
Sen. Carl Levin, chairman of the subcommittee, said this in a statement at the time:
“There is no evidence that the previous repatriation tax giveaway put Americans to work, and substantial evidence that it instead grew executive paychecks, propped up stock prices, and drew more money and jobs offshore. Those who want a new corporate tax break claim it will help rebuild our economy, but the facts are lined up against them.”
Why Didn’t It Work?
Companies already send their money overseas, then they pay less in taxes when they bring it back to the U.S. The 2004 plan didn’t work because companies just funnelled the money to their shareholders. This could actually raise costs. We need to close the loopholes that allow companies to put their money overseas, to begin with.
Here are the Young Turks talking about Trump’s tax plan:
Featured image via Twitter.