President Donald Trump is working on a new tax plan. Reports suggest that Trump wants to cut the corporate tax rate to 15%. That proposal could have serious long-term consequences for the United States—estimates show this will reduce revenue by $2.4 trillion in the first decade—and it amounts to little more than a massive giveaway to big corporations. Trump proposed the same tax cut for big corporations during the presidential campaign, as part of a larger tax plan that also included tax giveaways for the wealthy at a total cost of $7.2 trillion. We'll have to wait to see what the details of the plan are, but it's important that any tax plan help working people.
This is what a plan that actually works for working people would look like:
Big corporations and the wealthy must pay their fair share of taxes: Our rigged and broken tax system lets big corporations and the wealthy avoid paying their fair share of taxes, sticking the rest of us with the tab. Any tax reform proposal must not cut taxes for big corporations or the wealthy. On the contrary, tax reform should restore taxes on the wealthiest estates and tax the income of investors as much as the income of working people. It's imperative that tax reform make our tax system more progressive than it is now. Big corporations and the wealthy must pay more in taxes than they pay now, so we can build an economy that works for all of us.
Tax reform must raise significantly more revenue: Tax reform must raise enough additional revenue over the long term to create good jobs and make the public investment we need in education, infrastructure and meeting the needs of children, families, seniors and communities. Any tax reform that reduces revenues in the short term or the long term is unacceptable. Additionally, cost estimates must be honest and not rely on gimmicks that hide the true long-term cost of tax cuts.
Tax reform must eliminate the tax incentive for corporations to shift jobs and profits offshore: Taxing offshore profits less than domestic profits creates an incentive for corporations to shift jobs and profits offshore, while giving global corporations a competitive advantage over domestic corporations. Tax reform must eliminate the tax incentive for corporations to shift jobs and profits offshore, a move that would raise nearly $1 trillion over 10 years. Reform must not include a “territorial” system that further reduces taxes on offshore profits and would increase the tax incentive for global corporations to shift jobs and profits offshore. Tax reform also must encourage investment in domestic manufacturing, production and employment to ensure a robust manufacturing sector.
Global corporations must pay what they owe on past profits held offshore: Global corporations owe an estimated $700 billion in taxes on the $2.6 trillion in past profits they are holding offshore. Tax reform should use these one-time-only tax revenues to increase smart public investment in infrastructure rather than cut corporate tax rates permanently. The higher the tax rate on these accumulated offshore earnings, the more funding will be available for public investment in infrastructure.