The winning never stops!
Posted on 12/21/2017 8:31:22 AM PST by GonzoII
US Congress is fast approaching a consensus on a comprehensive tax reform. Though certain details still remain to be decided, it looks like US companies can expect to see their tax bills go down considerably. The reform will also lead to radical changes in how corporations are taxed in the United States. From now on, the US tax authorities will no longer tax the worldwide income of US companies; instead, following the concept of territoriality, only profits generated in the United States will be subject to tax. The Centre for European Economic Research (ZEW) in Mannheim together with the University of Mannheim have conducted a comprehensive study analysing the effects of this reform on international tax competition.
According to the findings, the reform will lead to a significant decrease in the effective tax burden (including US state taxes) on companies operating in the US from 36.5 per cent currently to 22.7 per cent. This is caused not only by the considerable cut in the federal statutory tax rate from 35 per cent to just 20 per cent, but also by the planned immediate write-offs for certain capital assets. Following the reform, the effective tax burden on firms in the US will be lower than in Germany (28.2 per cent) and close to the EU average (20.9 per cent).
This tax cut along with the decision to stop taxing worldwide income and move towards territoriality instead will also alter the incentives for international investment, with the US becoming an even more attractive investment location for European companies after the reform is implemented. However, US companies investing in Europe will also face a lower tax burden since, according to territoriality, there is no longer an obligation to pay US taxes on top of the taxes paid to host countries on.....
(Excerpt) Read more at zew.de ...
Full Report – PDF Analysis of US Corporate Tax Reform Proposals and their Effects for Europe and Germany - Final Report
Related from yesterday:
US tax reform breaks global rules, EU says (European finance ministers are worried)
The winning never stops!
Good. Trump thumbs his nose at angela, and improves things back home too.
I will point this out....they had a chance to work up the TTIP deal, and screwed it up at the end of the Obama era.
Trump can wave the TTIP deal at them and force them to spend three or four years talking about some deal, while the US gets highly competitive.
I’ll point another thing out....since Macron won, if you were looking for some Trump-like character to rebuild the French economy....he’s done a couple of things that shocked the socialists. France might be more competitive than Germany in just a year or two.
In the end....a TTIP-like treaty is the only mechanism to fix this problem (Trump might be around for seven more years).
Danke schoen, oooo Danke schoen(someone cue up young Wayne Newton...)
The German companies are coming here because the US is already the most formidable competitor in the world for manufacturering. The tax code was the biggest hurdle and now it’s gone. Combine that with the energy cost differential and the German manufacturers will flock here.
Do not see the relevance to the treaty. We do not need treaties or trade barriers. If Trump keeps it up the US competitive advantages will be overwhelming. All we need is to free our industries and businesses.
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