The Obama administration adopted new rules to prevent corporations from reducing or even eliminating their tax bills by relocating their financial headquarters to another country in what's known as a "corporate inversion," but the Trump regime is reportedly drafting plans to roll back or eliminate those rules.
Bloomberg first reported that the Treasury Department is currently considering the changes.
The Treasury is looking at regulations intended to prevent American firms from lowering their U.S. tax bills by shifting income to their offshore branches that they can loan to their domestic branches and deduct the interest off their Internal Revenue Service bills. The department is also contemplating repealing them entirely to replace them with something more business-friendly. [...]
Critics of the regulations say the rules are no longer necessary because the 2017 tax overhaul made corporate inversions less attractive, thanks to lower tax rates and limits on how much interest companies can deduct. Businesses argue that the regulations, under tax code Section 385, apply too broadly to non-abusive transactions and create onerous requirements by making companies track every loan.
No, you see, if it were actually true that the regulations are no longer necessary -- or if the GOP's tax cuts for corporations made the rules obsolete -- no one would be calling for their repeal.
You may recall that the Obama administration drafted these rules because the parent company of Burger King bought the Canadian coffee shop chain Tim Hortons and then relocated their financial headquarters to Canada to dodge American taxes.
There's no reason at all to think that won't happen again if these rules are repealed. And that's the idea. The richest people in the world want to fleece as much as they can before the music stops.
The idea that these regulations onerously compel companies to track every internal loan they make between subsidiaries -- as if they aren't already tracking that sort of thing -- is preposterous. They know where their money is going and they'd like to see less of it flowing into the Treasury.