Attorney Winston J. Krause Illustrates Advantages of Repatriation of Corporate Profits

According to a January 1, 2017, Salon article, Donald Trump’s economic plan includes an estimated $2.6 trillion repatriation proposal, which it claims is similar to the one that was passed by President George W. Bush in 2004. Additionally, according to the article, Trump promised to provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent to encourage American companies to create jobs.

“There is no way that the 2004 repatriation plan should be compared to Trump’s current proposal because the 2004 bill was small in scope, half-hearted and too complicated. No rational business person would want to jump through the hoops of requirements and qualifications, including detailed plans to be provided in advance about how the money would be put to work,” said attorney Winston J. Krause, founder of Krause & Associates, LP. “The thing that makes the repatriation work now is that it is a flat 10 percent corporate tax rate. The simplicity of it will help make it work. The Trump proposal bears no resemblance to the 2004 program.”

However, added Krause, taxing corporations is “unfair because it is a double taxation. People own the corporations and they get taxed when dividends get taken out. By lowering the tax on corporations you are lowering the taxes on the shareholders. It will encourage companies to bring the money back because of the lower double tax and the ridiculous requirement of providing detailed plans on where the money goes.”

Krause believes this will help the economy long-term because it will reduce the tax penalty of bringing the money back to the U.S. Public companies have the ability under the tax law to leave profits earned in foreign countries outside of the U.S. Leaving the earnings outside the U.S. avoids U.S. income taxes, which are among the highest corporate tax rates in the world -- an obvious incentive to keep foreign earnings out.

“It doesn’t make sense to bring money earned overseas back here to be taxed again at one of the world’s highest tax rates,” concluded Krause. “Foreign operations need capital, which is the lifeblood of business everywhere, so it makes no sense to expect all to come back; some needs to stay where it is now. In the same vein, high taxes take money away from the shareholders’ business. Lower taxes is always better for the economy, and a more robust economy makes more jobs.”

About Winston J. Krause, Krause & Associates, LP

Attorney Winston J. Krause is certified by the Texas Board of Legal Specialization as a Specialist in Tax Law (since 1989) and a Specialist in Estate Planning and Probate Law (since 1996). Mr. Krause is licensed to practice law in Texas and is a member of the bar of and qualified to practice before the United States Supreme Court, U.S. Court of Appeals for the Fifth Circuit, U.S. District Court, Western District of Texas, United States Court of Claims and the U.S. Tax Court. The law office is located at 504 West 13th, Austin, TX 78701.

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