The House Means and Ways Chairman, Dave Camp, has introduced a new tax plan aimed at reducing tax rates for corporations who make profits overseas.
Camp’s plan would create territorial tax system and drop the corporate tax rate from 35 percent to 25 percent. He argues that this would encourage corporations to bring their overseas profits back to the states.
The territorial tax system would permanently exempt a portion or all of profits earned overseas from taxation.
In addition to a territorial system, Camp may propose a tax holiday that enables corporations to bring profits back home without paying taxes or pay them at a reduced rate, as low as 5.25 percent.
Under the current law, corporate taxes are only paid on overseas profits that are brought back to the states. Corporations are in favor of territorial tax system because they argue that taxes are paid to the country where the profits are made and this places a double burden on their cash reserves.
People opposed to measure state that the territorial system does not give corporations the incentive to develop domestic investment.
Democrats and Republican can agree that the system is in need of serious reform, but there is no general consensus on how to do this. The tax code is complicated and navigating this system requires knowledgeable tax attorneys.
Corporations have numerous tax lawyers on their payrolls to help them understand current laws. Because the system is so complex even a small business can benefit from the knowledge of a tax attorney.
