When the President talks about Tax Reform, what exactly should President Trump have in mind? If I were already your United States Senator, I would press the Administration to include a tax cut on businesses that want to move money back into the United States. Currently, American businesses have their hands tied when it comes to competing internationally. Among those countries known as the Group of Seven (Canada, USA, Germany, Japan, France, UK, Italy), only the USA taxes their business transactions outside the country twice.
All but the USA use what is known as a Territorial Taxation System; in other words, businesses are taxed by the territory (country) in which the business is conducted but not by their home country. The USA is the only country that uses a Worldwide Tax System, in which businesses pay the same taxes as do the other 6 countries above when conducting business abroad but the USA then imposes taxes on these same profits when the money is returned to the USA. That is why we hear so much about unrepatriated earnings. Because there is a disincentive to return money to the USA, smart businesses simply keep their money outside the USA (currently estimated to be $ 2.1 trillion) and use it to invest abroad because bringing profits back to the US incurs so much taxation. Those taxes are currently at a confiscatory level of 35%. This needs to change to encourage growth at home. The President has proposed reducing such tax to 15% to 19%. While we would still be the only one in the G-7 taxing such profits, it would be a step in the right direction. I would agree for a maximum tax of 10%.