I’ve spent this last month in Ohio, hearing from American workers, families, and businesses about the effects of the Tax Cuts and Jobs Act. In this time, I’ve toured plants, hosted roundtables, and met with hard working Ohioans. Did you know nearly 50 companies in our state have announced bonuses, increased pay, improved benefits, and announced plans to give more to charity? Even utility companies are lowering their rates. Tax reform is enabling Ohio businesses to invest in workers, innovation, and future generations. This week we look forward to making the benefits of these cuts permanent and continuing to incentivize saving for the future and motivate innovation.
As my colleagues and I were writing the Tax Cuts and Jobs Act last year, I made a lot of TV appearances to discuss the benefits of the legislation. Given my background as a CPA and businessman, rewriting the tax code to favor American jobs and workers came naturally. However, the left wing media often made frivolous attacks in attempt to rally their ratings and generate sounds bites. The corporate tax rate was a particularly hot issue, with some summarily arguing that corporations are greedy monsters. The point frequently missed is that lowering business rates makes America competitive, leads to job growth, puts more money in worker’s pockets, and provides less incentive for investment to move overseas. Reducing the corporate tax rate was a necessary step to lead us into an age of prosperous economic growth.
In recent years we’ve all heard a lot about inversions. We’ve heard about companies shifting operations overseas and not investing back into the U.S. This was largely a result of the old tax code, which made this business climate at home pretty terrible. As a businessman, I know that creating a favorable business climate is crucial for the economy. And that’s just what this new tax code does.
Prior to the new tax law, trillions of dollars were trapped offshore. The old law strongly dis-incentivized businesses from bringing their overseas earning back to the US, which meant these funds couldn’t be invested at home. By modernizing the tax code’s international provisions, we’ve required American corporations to address this problem and bring foreign earnings back into the U.S.
In Washington, career politicians have created a system that perpetuates problems, and creates go-nowhere gimmicks with the next election in mind. It’s time to end that game and get real.
One example of this is pharmaceutical giant Amgen Inc., who’s footprint includes Ohio. In late 2017 the drug maker was projected to have $39 billion offshore, which was roughly 94 percent of their total cash. With the enactment of tax reform, the company was assessed with an estimated $6- to $6.5 billion as it repatriated those dollars. As money now easily flows back into the country, Amgen has announced plans to invest around $3.5 billion in capital expenditures in the U.S. over the next five years. This includes building a $300 million plant to lead the deployment of next-generation bio-manufacturing technologies. During a financial call in February, CEO Bob Bradway announced “We developed these technologies in the U.S. and thanks to the tax reform, we will now build new manufacturing capacity and add highly skilled jobs here in the U.S. to capitalize on them.”
Though we are unleashing new revenues into our Treasury, some politicians are nonetheless trying to stifle growth and take our corporate tax code backwards. I am seeing legislative proposals that seek to dramatically penalize American companies if they lose just one U.S. job. This not only hurts businesses —it ultimately hurts consumers and job seekers. The better answer would be to foster and perpetuate a market climate that incentivizes job creation and worker development. That’s the only way to drive long term growth.
Remember, before Tax Cuts and Jobs Act, companies that moved jobs overseas were paying 0 percent U.S. tax after planning. Now thanks to a new provision, they’re paying 10.5 percent. That’s revenue that was not getting taxed under the old law and according to the nonpartisan, Joint Tax Committee, analysis estimates that Global Intangible Low-Taxed Income (GILTI) will bring in $112.4 billion dollars in new revenue between now and 2027. That’s revenue that was not getting taxed under the old law.
In the business world, when there is a problem you either fix it or you fail. In Washington, career politicians have created a system that perpetuates problems, and creates go-nowhere gimmicks with the next election in mind. It’s time to end that game and get real.
The U.S. is the largest economy in the world and is getting stronger every day thanks to the leadership of President Trump. So let’s put the politics aside and work together to support tax legislation that reaps real world results.