Republicans in Congress have been pushing for the implementation of what’s known as a territorial tax system. Under such a system, the overseas profits of U.S.-based companies would be forever exempt from taxation. And the GOP is going to get a little help soon from a new lobbying entity, according to Politico:
The group — dubbed the LIFT America coalition — is in the process of seeking corporate members and hasn’t yet officially launched .
Partners, a Washington public affairs firm, is handling the group’s communications, recruitment and strategy.
Recruitment documents obtained by POLITICO indicate the group’s primary focus is pressing Congress to shift the corporate tax regime to a so-called territorial system in which companies are shielded from paying tax on most — if not all — of the profits they earn in other countries.
Currently, the U.S. corporate tax system exempts overseas profits until they are brought back to the U.S., giving companies little reason to ever bring them back. However, shifting to a territorial system would make that problem even worse. According to the Congressional Budget Office, a territorial system could “result in a less efficient allocation of resources among countries by increasing incentives to shift business operations and reported income to countries with lower tax rates.”
Switching to a territorial system would cost the U.S. about 800,000 jobs and more than $130 billion in revenue. As economist Jane Gravelle explained, a territorial system “would cause investment to flow abroad, and that would reduce the capital with which workers in the United States have, so it should reduce wages.” Already, corporate profits are at an all-time high, while worker wages are at an all-time low.