“Comprehensive tax reform has been a long-standing priority for our network, and the election of Donald Trump, coupled with pro-freedom majorities in the House and Senate, offers us a once-in-a-generation opportunity to restore prosperity by enacting reforms,” the document, obtained by The Intercept, declares.
In addition to sales and income tax, states are funded through other sources, like corporate tax, severance tax (taxes incurred on the production of non-renewable resources, like oil), or property tax. In the below graphic, the Pew Charitable Trusts breaks down the percentage of each of these sources in the 50 states.
Despite being the richest state in the country, by per-capita income, Connecticut’s budget is a mess. Its pensions are woefully under-funded. Its deficit is projected to surpass $2 billion, or 12 percent of its total annual tax revenue. Hartford is approaching bankruptcy. Conservatives look at Connecticut and see a liberal dystopia, where high taxes have ruined the economy. Liberals, on the other hand, see a capitalist horror show, where the rich dwell in gilded mansions, ensconced in sylvan culs-de-sac, while nearby towns face rising poverty and bankruptcy. Why is America’s richest state floundering?
For a city, like the country at large, that was hurting economically, Steve Bach seemed like a man with an answer. What he promised sounded radically simple: Wasteful government is the root of the pain, and if you just run government like the best businesses, the pain will go away. Easy. Because he had never held office and because he actually had been a successful entrepreneur, people were inclined to believe he really could reinvent the way a city was governed.
And that disparity is entirely unjustified, because far more untaxed American profit hides out in the Netherlands than in Bermuda. Since 2005, nearly half a trillion (!) dollars in American profit has been safely stored in the Netherlands by companies such as Nike, General Electric, Heinz, Caterpillar, Time Warner, Foot Locker – the list goes on and on. Half a trillion dollars: it’s an unfathomable amount of money, nearly twice the country’s entire budget.
Psst–and to bring it back home:
If history is any guide, the US government will eventually swing legislation back in your company’s favor.
In 2005, for example, Congress passed a law that allowed American multinationals to bring home their foreign profits at a temporarily low rate of 5.25% – a mere one-sixth of the regular tax rate. Some $362 billion flowed back into the US as a result. A quarter of that – a whopping $90 billion – had been cached in the Netherlands.
The promise was that the law would create American jobs. But it didn’t, revealed an analysis conducted by the nonpartisan Congressional Research Service. Nonetheless, another profit repatriation tax break will probably take effect soon. Trump’s proposed tax plan includes a temporarily reduced rate of 10% on overseas earnings that are returned to American soil.
And so Trump, for all his MAGA rhetoric, reinforces American companies’ biggest lesson: earn your money in other countries and you’ll pay less tax.