Me, "While I am a little concerned about the fact that most of the Tax Overhaul would benefit the wealthiest taxpayer, the best part of the Republican Tax Overhaul is how corporations would be taxed on where they produced and sold an item. It would encourage exporting of goods because there would be no taxes levied on it. But would put a tax on imports and on goods produced here. Right now, the tax code encourages jobs and corporations to be located outside of the U.S.. With this new tax code, businesses would be encouraged to keep production in the U.S. (and keep jobs here) making up for taxes on it with no tax on exports (which would increase export production)."
(This is one of the most controversial parts of the House Republicans' tax plan. It is also key to making it work.
Under current law, the United States taxes the profits of U.S.-based companies, even if the money is made overseas. However, taxes on foreign income are deferred until a company either reinvests the profits in the U.S. or distributes them to shareholders.
Critics say the system encourages U.S.-based corporations to invest profits overseas or, more dramatically, to shift operations and jobs abroad to avoid U.S. taxes.
House Republicans want to scrap America's worldwide tax system and replace it with a tax that is based on where a firm's products are consumed, rather than where they are produced.
Under the system, American companies that produce and sell their products in the U.S. would pay the new 20 percent corporate tax rate on profits from these sales. However, if a company exports a product abroad, the profits from that sale would not be taxed by the U.S.
There's more: Foreign companies that import goods to the U.S. would have to pay the tax, increasing the cost of imports.
Exporters love the idea. But importers, including big retailers and consumer electronics firms, say it could lead to steep price increases on consumer goods. The lobbying has already begun.)
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