BUSINESS/TAXES: “The U.S. tax overhaul may bring trillions of dollars in accumulated profits back home from overseas financial centers, but will likely deliver a smaller boost to U.S. investment by foreign businesses, according to an analysis by the United Nations.
The overhaul included a cut in the rate at which company profits are taxed, a one-time repatriation tax on foreign profits accumulated over the past three decades and measures to encourage technology firms to move their patents and licenses to the U.S.
In a report published Monday [2-5-18], the United Nations Conference on Trade and Development said the lowered tax rate will make it more attractive for U.S. firms to move some of their manufacturing operations back home, and foreign firms to invest in the U.S… But the U.N. report said the tax cut is less sizable than it appears, because many companies were already paying lower rates by taking advantage of deductions and loopholes. And it expects other developed countries to respond by lowering their tax rates to hold on to investment and jobs… Nor are the tax cuts likely to large enough to make up for the differences in labor and other costs between the U.S. and developing economies. The report estimates that hourly labor costs in U.S. manufacturing are three times higher than in the five Asian economies that host most U.S. foreign investment in that sector… The agency said a measure in the overhaul that allows businesses a full deduction on their capital spending would likely boost investment, but may not persuade foreign companies to set up new facilities.”
-Paul Hannon, “U.N. Sees U.S. Tax Cut Offering a Limited Boost to Foreign Firms,” The Wall Street Journal online, Feb. 5, 2018 12:00pm