Washington, D.C. — The Trump administration’s signature tax policy, the 2017 so-called Tax Cuts and Jobs Act (TCJA), gave substantial tax cuts to large corporations, significantly reducing the revenue the government raises from the corporate tax, even in the wake of historically high corporate profits.
A brief by new Center for American Progress senior fellow Kimberly Clausing, a leading international tax scholar and economics professor at Reed College, looks at the impact of several proposals to reform the TCJA and examines these reforms’ ability to raise revenue and discourage profit shifting and offshoring. In the brief, Clausing also estimates the amount of revenue the United States could expect to raise from enacting various reforms. It finds:
- Applying the TCJA’s minimum tax on a country-by-country basis would raise between $427 billion and $738 billion in revenue between 2021 and 2030.
- A 28 percent per-country minimum tax could raise between $690 billion and $1.1 trillion in revenue between 2021 and 2030.
- A 35 percent per-country minimum tax could raise between $1 trillion and $1.6 trillion in revenue between 2021 and 2030.
- Repealing the foreign-derived intangible income deduction could raise between $127 billion and $212 billion between 2021 and 2030.
“Despite soaring corporate profits prior to to the TCJA, the United States was collecting far less tax revenue than many other countries, because large companies shifted profits overseas to avoid paying their fair share of U.S. taxes. Under the TCJA, companies pay lower taxes, but many companies are still moving their earnings overseas to avoid contributing to the U.S. tax base,” Clausing says “The reforms to U.S. international tax rules detailed in the brief would simultaneously raise corporate revenues, reduce profit shifting, and end the incentives to offshore economic activity that are embedded in current law.”
Click here to read the issue brief: “Options for International Tax Policy After the TCJA” by Kimberly Clausing
For more information or to speak to an expert, contact Julia Cuisck at firstname.lastname@example.org or 202-495-3682.