There is so much bad to pick and choose from in the Republican corporate tax-gutting monstrosity being strong-armed through Congress right now, it's hard to focus on the sheer horror of what they’re trying to do for the sake of pleasing their huge corporate and business donors at the expense of those Americans who actually work for them.
But one little gem stands in sharp relief to all the phony promises about how this will somehow benefit ordinary people, i.e., those earning under six figures a year. As Eric Levitz points out in an article aptly titled “How the Trump Tax Cuts Would Reshape (and/or Break) our Economy,” the House and Senate Republican tax bills would strongly encourage corporations to outsource American jobs, while at the same time reward those same corporations handsomely for replacement of American workers with robots and automation:
Right now, Uncle Sam taxes the profits of American corporations at the same top rate of 35 percent, no matter where on the planet that money is earned (statutorily, anyway). Most European countries, by contrast, only tax their firms’ domestic profits.
Both the Senate and House bills would move the United States in the direction of the European “territorial” system: Under the House bill, American companies would pay a mere 10 percent rate on the income of their high-profit foreign subsidiaries; under the Senate version, they would pay 12.5 percent on profits derived from intangible assets (i.e. intellectual property).
Levitz then quotes tax professor Rebecca Kysar who explains the real world implications of lowering the tax rate for overseas subsidiaries—it means, basically, that all those “jobs” will be going to foreigners:
Faced with a 20 percent rate at home and a 12.5 percent (or less) effective rate on income earned abroad, companies would still be encouraged to move jobs and profits offshore. The Senate plan attempts to deal with this problem, at least in the case of intangible assets, by also granting a 12.5 percent rate on an American company’s domestic intangible income…[.]
Other dynamics worsen the shifting problem....Because of the mechanics of the formula for calculating the minimum tax, the tax can be reduced by moving assets overseas. Additionally, because the minimum tax is essentially calculated on a global basis, rather than per country, this further encourages companies to shift investment offshore in order to blend low- or zero-taxed income from tax havens with income from higher-tax foreign countries. So, rather than paying 20 percent or even 12.5 percent on income earned in the United States, companies will move investment offshore to a tax haven until the global foreign tax rate is blended down to the minimum rate, avoiding paying American taxes altogether.
And even those Americans who manage to hold on to the few jobs that are left after all this tax-cut-happy outsourcing have nothing but a bleak and decimated future to look forward to under the Republican plan:
But the Republican bills don’t just encourage American companies to ship jobs overseas — they also increase the incentive to replace workers with robots. Both bills include “Full and Immediate Expensing” — a provision that allows companies to write off the cost of new capital investments right away, rather than when they sell those assets. Some economists expect this change to ramp up investment in new machines — and, thus, automation.
While the relentless corporate march to automation is already impacting the American workforce and will continue to do so over the next decade, the Republicans appear determined to make it happen as soon as possible, with absolutely no safety net or other employment options in place for those whose lives and future prospects are shredded by their plans.
Unless, of course, you want to move to Mexico or Vietnam—there will still be plenty of jobs there. But you may not care for the salaries.