Ben Franklin told us the only two things we can’t avoid are death and taxes. While we all complain about taxes, a good majority of us understand taxes have a purpose.
Looking at the upcoming administration, I’m particularly interested in how President Trump and the Republican Congress will address the tax code.
For me, the best aspect of Trump’s proposed tax code is lowering the corporate tax rate. Lowering the corporate tax rate in the United States will create an incentive for companies to stay in the U.S. and encourage foreign companies to move to the U.S.
As it stands, the U.S. has one of the highest corporate tax rates in the world at 35 percent. This has led to many corporations’, including Apple, Google and Microsoft, having subsidiaries in other locations to avoid paying the tax rates.
While the taxes provide revenue into the tax system, according to some economists and corporations having the taxes causes companies to leave the United State to avoid the tax overhead. Trump agrees with these conditions, and one of the platforms of his campaign and of his White House is lowering the corporate tax rate on American companies.
While the decrease in revenue is a very pressing concern, there is a trend of American companies leaving the United States to set up headquarters in other countries such as Switzerland, South Korea and Singapore. By lowering the corporate tax rate, there is a greater incentive for these companies to stay in the United States. This has caused many economists to suggest in order to become competitive again, the U.S. should lower their tax rate on corporations.
While some sources say that President Trump’s suggested 15 percent is too much of a cut at this moment, many publications support this tax cut.
I understand that lowering taxes on corporations isn’t always a popular move. However, there is a pressing concern of corporations leaving the U.S., and as much as we don’t have to like it, companies are not required to always have their headquarters in the country they were founded in. Corporations are here to make a profit, and if moving to another country allows a corporation to become more profitable, it is understandable why these corporations would go overseas.
Lowering the corporate tax rate would bring more businesses back to the U.S. It could allow the $2 trillion dollars kept abroad by American companies to come back to the U.S. and could help grow the companies domestically. While I wish I was getting a personal tax cut too, I support this plan.
npatwari@umail.iu.edu
