Alright, here’s a quick international business lesson. Very quick, I promise, so don’t be scared off.
If an American company makes money overseas, they can’t just transfer that money back into the United States. No, Uncle Sam would like them to pay a toll. Any idea what that number is?
A whopping 35 percent!
I’m a company, and I make $1 million in overseas profits. Am I going to pay the American government $350,000 of that just to bring it home? Of course not. I’ll just keep it overseas and spend it there. That’s way cheaper.
That’s also exactly what companies are doing, which means the government is collecting zilch on that tax.
Rand Paul, the Senator from Kentucky, realizes how ridiculous this is. And he wants to fix it, while also trying to create some money for transportation projects.
Keny Colston of WFPL writes this about Paul’s plan:
“Paul is sponsoring legislation that lowers the tax companies pay to transfer foreign profits to America from 35 percent to 5 percent. Many of those companies keep that money overseas instead of paying the 35-percent tax.
The new tax revenue generated under Paul’s proposal would be put into a transportation fund, which could benefit projects including the Ohio River Bridges and the Brent Spence Bridge in Northern Kentucky.”
The idea then is that way more companies would opt to bring money back into the U.S., because the rate isn’t so high anymore. So rather than collecting zilch from companies with a 35 percent rate, maybe the country now gets 5 percent from 50 different companies.
Which is, of course, a way better deal for both sides. Companies aren’t punished for wanting to stay at home, and the government can actually fix some transportation infrastructure issues.
Plus, it’s not often the Republicans can offer a tax cut, while also appeasing Democrats by promising a bone that includes more revenue in it. It seems pretty hard to argue against, actually.
Just one of the many ways Paul is trying to inject some common sense back into Washington D.C. politics and American public policy.
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