During his time on the campaign, President Trump would repeatedly say, “We’re going to win so much you’re going to get tired of winning.” Well, President Trump has stayed true to this word. After haggling with the Congress to get off their collective butts and pass a Tax Bill that is not only friendly to the American Taxpayer but also American Businesses. It looks like the winning has gone into high gear.
Of course, there are the usual chants from the Democrats of how this tax bill only benefits the wealthy and how the meanie Republicans don’t care about the hard-working middle-class American. Huh, I do think they protest a bit much. Don’t be fooled by their cries of doom and gloom. You see, we have a President who understands business and staying profitable so you can provide jobs to those who want to work. Most of the Democrats in Congress have NO idea what it takes to run a business, let alone what having a REAL job means to care for your families. They are so out of touch with reality that if they ever had to live like the rest of us, they would crumble like a bag of old potato chips.
Enter, the latest case of winning. For years, large corporations have kept billions of dollars in overseas accounts to avoid paying the excessive federal and state tax rates if they were to bring the money back to this country. However, with the passing of the new tax bill that roadblock has been lifted, allowing U.S. companies holding about $1.4 trillion in cash offshore to bring that money back to the US. After the eight years of Obama and his constant attack on US businesses, this will be a welcome change by having billions of dollars flood back into the country for investment, and potential growth and jobs.
Over the past few years, Apple CEO Tim Cook has requested Washington lawmakers make it less costly for his company to bring back the billions of dollars it holds overseas. However, his request went unanswered until President Trump took the helm in the White House. Days after President Trump’s inauguration, Cook commented how any tax reform package that encourages repatriation would be tremendously good for the country and for Apple.
An incentive for companies to bring that cash to the US is now in the new American tax rules. Firms can no longer avoid paying tax on past international profits by keeping the money outside the United States. They must pay tax whether they bring this cash back to the U.S. or not. The new rules require U.S. companies to pay a tax of between 8% and 15.5% on overseas earnings made since 1987 if they remain offshore. However, after making this one-off payment, they’ll be able to bring the money back home without paying additional tax.
“For many U.S. multinationals, by far the biggest impact will be the one-time charge,” stated Craig Hillier, the head of the international tax practice at EY.
Under the old law, companies would have owed a top rate of 35% when bringing foreign profits back to the U.S. U.S. companies are expected to announce the tax hit now and pay the money in installments over several years. Congress estimates this one-time charge will bring in $339 billion over the next ten years. Ching, ching… not bad at all.
While the one-time repatriation tax will not be pleasant, many companies will stand to benefit from much lower tax rates in the future. Also, much of the earnings they make overseas in 2018 and beyond will no longer incur any U.S. tax. This is even if they’ve returned to the U.S. This may sound bad to some people, but bringing profits back to the US to invest here will not only benefit investors in these companies but American workers as well in more jobs and building their retirement plans.
It’s projected that five major tech companies: Apple (AAPL), Microsoft (MSFT), Cisco (CSCO), Oracle (ORCL) and Google’s parent company Alphabet (GOOGL) are estimated to have been holding $594 billion in cash overseas at the end of 2017.
Pharmaceutical giants such as Johnson & Johnson (JNJ), Merck (MRK) and Pfizer (PFE) were also named as major holders of overseas cash in a 2017 report by Oxfam.
Apple CEO Tim Cook said in 2015 that he would love to repatriate foreign profits, but it would cost him 40% to do so. He was referring to the combined U.S. federal and state tax rate Apple would likely have owed under the old tax law.
Apple has $129 billion in offshore cash that has not been subject to U.S. tax, according to its latest annual earnings report. If all this is taxed at the upper 15.5% rate under the new rules, Apple would owe about $20 billion.
GE, meanwhile, had about $82 billion held outside the U.S. at the end of 2016. If this full amount is taxed at the 15.5% rate, the company will pay $13 billion to the IRS. The vast tax overhaul which was recently signed into law by President Trump is expected to boost business by cutting the tax on U.S. earnings from 35% to 21%. This gets the US tax rate on business to a much more competitive rate with other lower taxing countries. However, the transition to the new system could be messy.
Many international companies have recently warned other changes in the tax code could mean billions of dollars in one-off losses for 2017, as they must write down the value of tax credits accumulated in previous years. Major European banks such as Barclays (BCS), Credit Suisse (CS) and UBS (UBS), plus oil giants as BP (BP) and Shell (RDSA), have all indicated the new tax rules could cost them between $1 billion to $3 billion each in 2017.
As you can see, this is all quite complex. However, because of President Trump, the opportunity for companies to bring their cash loads back home gives the green light to growth and prosperity. This cash influx into our economy will not only benefit the businesses but will enrich the American people wanting a job and to build a nest egg for their future retirements.
So, as I end, I will ask you the pressing question again. Are you tired of winning yet? I sure hope not because there is undoubtedly more to come with a Donald Trump Presidency.
Fellow Patriots, please join The Trump Times as we gather a team for this fight here: Drain the Swamp 2018 (Please don’t forget to look up your district when you fill out the form.) The America First Coalition is almost ready to launch and will provide the organizational structure needed for our collective efforts to hit pay dirt. The State and District Leaders we need are just the start. We also need people who have specific local interests like education, as well as “town criers” to sound the alarm clock for The Sleeping Giant. No effort you can spare is too small. If you sign up and only have time for a single Facebook share, it was a share that wouldn’t have happened without you.