PRESS RELEASE
GOP Rushing To Make United States World’s Biggest Tax Haven
Dec. 13, 2017 (EIRNS)—The Republican Party’s "tax reform" folly which apparently will be passed into law before Christmas, looks likely to convert the United States into the world’s largest tax haven. Lacking a VAT tax and with a corporate tax of just 21% with plenty of ways to go well below that, America will be a golden destination for international speculative flight capital.
An Dec. 11 editorial in Global Times, "China Must Act To Blunt Impact of U.S. Tax Cuts," almost spoke of a "great sucking sound" taking capital out of other countries. It recommended controls on capital outflows and increases in total factor productivity (technological productivity) in China’s economy. "China will bear the brunt of the U.S. tax reform," the editorial said. "Thus, China should take decisive measures to safeguard the smooth operation of the national economy.
"The first and most important step is to improve the management of outbound capital to avoid systemic financial risks. China can impose a gains tax on outbound capital, building a ‘dam’ to prevent massive outflows of cross-border capital in the short term. The tax rate can be adjusted as necessary. Also, a supervision and early warning mechanism for cross-border capital flows should be established to prevent swift capital outflows and thus safeguard the sound development of related industries.... Along with the opportunity of blunting the impact of the U.S. tax reform, we can push forward the supply-side structural reform to benefit more industries and comprehensively increase the total factor productivity so as to enhance China’s core competitiveness."
Total factor productivity has been unknown in the United States since the assassination of President John F. Kennedy.
The tax legislation will also rob tax revenues that could be leveraged for desperately needed new infrastructure investments, which GOP leaders oppose. It invites U.S. corporate profits sequestered in overseas havens to return to the big new haven, at an even lower rate of 12-14%, with no requirement of investing in an infrastructure credit institution. And it even retains the "carried interest loophole" for hedge funds—breaking candidate Trump’s very first campaign promise. Rather than a victory for Trump, it is his defeat by the House and Senate GOP leaders.
Though seating newly elected Sen. Doug Jones from Alabama could have defeated the final bill, the Congressional leaders will keep the appointed-and-defeated current Senator, Luther Strange, in that seat until it can be voted through. Thus a ghastly bill will be passed by a Strange vote.
