Cohn says repatriation tax rate will be in 10% range
Proceeds from tax would represent a one-time source of revenue, which could offset some of the deep tax cuts Trump has proposed
Treasury Secretary Steven Mnuchin and Gary Cohn, the chief White House economic adviser, on Capitol Hill, in Washington, September 12th, 2017. The Republican tax framework is built around a plan to slash corporate taxes, but party leaders now face a key question: Can they afford to make those cuts permanent? (Photograph: Al Drago/The New York Times)
National Economic Council Director Gary Cohn said Sunday that the Trump administration’s proposed tax on offshore profits would be in the “10 percent range.”
The long-awaited tax framework unveiled by White House advisers and congressional leaders last week didn’t specify the rates for the one-time tax US companies would be subject to for their accumulated offshore profits. The plan just said there would be a higher rate for income held in cash compared to the rate for less liquid investments.
Cohn, a member of the so-called Big Six involved in the tax negotiations, didn’t elaborate during an interview on Fox News’ “Sunday Morning Futures” on whether the range he mentioned would apply to cash or non-cash holdings. “We’ve given the tax-writers in the Senate and the House the ability to adjust those knobs, adjust those numbers,” he said. During the 2016 presidential campaign, President Donald Trump called for a 10 per cent levy on offshore profits, rather than a split rate as was outlined in the House GOP tax blueprint released last year.
Unlike most developed nations, the US applies its 35 per cent corporate income tax to companies on their global earnings, not just their US income. But companies can defer taxes on their overseas profits until they decide to return those earnings to the US, or “repatriate” them. In their eagerness to defer tax bills, companies have stockpiled an estimated $2.6 trillion offshore. Trump has said repeatedly he believes the amount is far higher. Proceeds from the so-called “repatriation tax” would represent a one-time source of sorely needed revenue, which could offset some of the deep tax cuts Trump has proposed for businesses.