The reason it helped is because the new tax act has given benefits to individuals
and corporate income that file taxes. The reason the tax code is complicated with
small improvements in some other areas like fairness or efficiency. Yes, we have
become more competitive with other countries, Pam Olsen stated the importance
of distinguishing ourselves from other major trading partners to improve our
competitiveness and to make revenue better for the country. International tax is
so important to the U.S. tax code because it applies to the income earned from
overseas operations and sales. The tax treaties between countries decide which
country collects tax revenue.
the new tax act both helped and complicated the tax code. While they attempted
to make things flow better and be more competitive, they still managed to make
things very complicated. I once compared taxes to the scenario that 1+1=2
except when the first 1 is blue then it is 3. If the second 1 is green then it equals
4. This is the kind of situation that I think they are helping but making worse. By
saying you can do this or we will lower your rate but you must pass all these
different classifications first. Many corporations simply do not want to deal with
all the trouble it involves. If you end up breaking out the cost by labour, lawyer
fees etc., it might not be worth the hassle.
In competitiveness, I believe we are getting there but I think we still have a long
way to go. By lowering the percentage to 21% for corporations, this helped.
However, I did a study on Canada and found that the corporation that owns
Burger King, purchased Tim Hortons in order to move the tax basis to Canada
(Isidore & Sahadi, 2014). While they are not eliminating taxes, they are
receiving a tax break compared to the US (Isidore & Sahadi, 2014). I know it is
much more complicated than I am stating but looking at it like this: Right now,
we are receiving 0% from Company A, if we dropped the tax rate to 12%, we
have the potential to receive 12% of something. (12% of 12mil is 1,440,000) I go
with the idea that something this better than nothing. I understand there is more
to it than that and that no politician would ever agree to dropping the rate that
much but maybe we need to think a little bigger. b
As Pamela Olsen stated in her testimony, things have changed since many of
these international tax laws have been in place. If you think of how business
worked in 1968 compared to 2018, that is a lot of change in 50 years. With the
wide spread use of the internet, even smaller corporations are now dealing with
international business. The more we grow and expand as an international
economy and business, we must have better laws in place for international
business. This is incredibly important for the US to have international tax as part
of the tax code due to the potential loss of taxes from these smaller international
dealings. I do not want to see these little corporations taxed the same as a large
one but we need to make sure that we are letting the least amount of tax money
leave the country as we can. We also must include these international tax laws in
our US tax code in order to keep some of the profit from a corporation that is
moving as much of its profit out of the US.
The best way to keep as much tax dollars in the US as we can is to lower the
overall tax rate. As I said earlier, 12% is better than 0%, but not everyone wants
to see that.
References
Isidore, C., & Sahadi, J. (August 27, 2017). Burger King buying Tim Hortons.
CNN Business. Retrieved b
https://money.cnn.com/2014/08/26/news/companies/burger-king-tim-
horton/index.html
How does the tax system affect US competitiveness? Tax Policy Centre. (n.d.).
https://www.taxpolicycenter.org/briefing-book/how-does-tax-system-affect-us-
competitiveness
International tax rules. Tax Foundation. (n.d.). https://taxfoundation.org/tax-
basics/international-
taxrules/#:~:text=International%20tax%20rules%20apply%20to,minimize%20t
heir%20global%20tax%20burden.
