Premium
Tax Regime Uncertainty
Author(s) -
Strobel Caroline D.
Publication year - 2017
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22270
Subject(s) - legislation , repeal , corporate tax , business , investment (military) , incentive , tax avoidance , tax reform , privilege (computing) , tax policy , tax credit , economics , international economics , economic policy , public economics , market economy , law , political science , politics
I had hoped to be writing a column on proposed tax legislation in the United States, but this seems to have been pushed back in favor of other legislation, particularly the repeal of the Affordable Care Act. I will comment on what seems to be the general consensus around future tax legislation. On the corporate side, it appears that corporate rates will be lowered to a top rate of 20%, down from nearly 40%. This will allow us to be competitive from a tax standpoint with European countries. Taxes are a major expense that is incurred by businesses for the privilege of doing business. To address the problem around profits that have not yet been repatriated back into the United States, there will be a lower rate for profits brought back from abroad provided they are spent to increase corporate investment on plant and new employees in the United States. Another welcome move apparently will be the immediate write‐off of currently depreciable property. These moves should provide a powerful incentive for investment in the United States. There is also strong support for making our tax system water‐edge, which is what is done in the rest of the industrialized world. This will eliminate the reluctance to keep profits overseas to prevent the imposition of additional taxes because of our currently higher tax rates.