The GOP tax bill is good for middle-class Americans

What’s worse, the high U.S. rate has given American multinational firms an incentive to leave foreign earnings offshore. An American firm that generates profits from a Canadian subsidiary will pay the lower Canadian rate if it reinvests the money in Canada, but if the profits are reinvested in the U.S. they’ll be taxed at the full U.S. rate. So multinationals have an incentive to leave money abroad, and that means fewer jobs for American workers.

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The bill also offers a tax repatriation holiday, under which American firms with money parked abroad could bring it back and pay a tax rate of just 10%. And how much are we talking about? CNBC reports that American firms have left $2.6 trillion in foreign subsidiaries. That amounts to nearly 14% of U.S. GDP. If firms had an incentive to re­invest the money here, think what this would mean for American jobs.

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