,
5 tweets,
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Me, in the @nytimes (a first), with a simple message:
The offshoring of U.S. corporate profits is a real problem, and Trump's tax reform if anything made the problem worse.
nytimes.com/2019/02/06/opi…
The offshoring of U.S. corporate profits is a real problem, and Trump's tax reform if anything made the problem worse.
nytimes.com/2019/02/06/opi…
The Times did some great graphics to accompany my argument --
like this one, showing the location of U.S. corporate profits relative to the underlying size of the economies that in theory are generating the profits.
like this one, showing the location of U.S. corporate profits relative to the underlying size of the economies that in theory are generating the profits.
The distortions associated with tax have long been treated as secondary, compared to say the distortions associated with tariffs. I think that's now backwards, as the distortions associated with firms efforts to move profits to low tax jurisdictions tax are now huge.
And there is no sign that the Trump tax reform got rid of the incentive to offshore profits - the geographic location of the profits U.S. firms "earn" abroad hasn't changed after the reform. The bulk are still coming from a few low tax jurisdictions.
And the tax reform, perversely, strengthened the incentives for firms too offshore their "tangible" assets (think factories, think jobs) as well as the profits from their "intangible" assets (think IP/ design), something that @rebeccakysar and others have emphasized in the past.
