U.S. companies expected to cash in when Republican Donald Trump became president in 2016 but, according to a New York Times report, they found they were able to achieve a massive windfall in tax savings totaling in the billions beyond their wildest dreams due to a very compliant Treasury Department.
According to the report, President Trump's 2017 tax cut bill was expected to dramatically increase the fortunes of American corporations but, once passed, lobbyists found that certain provisions could be finessed by applying pressure on Treasury officials who were more than willing to listen.
"But big companies wanted more — and, not long after the bill became law in December 2017, the Trump administration began transforming the tax package into a greater windfall for the world’s largest corporations and their shareholders. The tax bills of many big companies have ended up even smaller than what was anticipated when the president signed the bill," the Times reports. "One consequence is that the federal government may collect hundreds of billions of dollars less over the coming decade than previously projected. The budget deficit has jumped more than 50 percent since Mr. Trump took office and is expected to top $1 trillion in 2020, partly as a result of the tax law."
Reporting that in 2018, "senior officials in President Trump’s Treasury Department were swarmed by lobbyists seeking to insulate companies from the few parts of the tax law that would have required them to pay more," the Times adds that, "The crush of meetings was so intense that some top Treasury officials had little time to do their jobs, according to two people familiar with the process."
One key element of the Trump tax bill was a set of proposed major new taxes on companies who had avoided paying their fair share by claiming their profits were earned outside the United States.
Lobbyists for a "cross-section of the world’s largest companies, including Anheuser-Busch, Credit Suisse, General Electric, United Technologies, Barclays, Coca-Cola, Bank of America, UBS, IBM, Kraft Heinz, Kimberly-Clark, News Corporation, Chubb, ConocoPhillips, HSBC and the American International Group," worked in concert to gut that provision.
"Through a series of obscure regulations, the Treasury carved out exceptions to the law that mean many leading American and foreign companies will owe little or nothing in new taxes on offshore profits, according to a review of the Treasury’s rules, government lobbying records, and interviews with federal policymakers and tax experts,' the Times reports. "Companies were effectively let off the hook for tens if not hundreds of billions of taxes that they would have been required to pay."
According to Bret Wells, a tax law professor at the University of Houston, "Treasury is gutting the new law. It is largely the top 1 percent that will disproportionately benefit — the wealthiest people in the world.”
"It is the latest example of the benefits of the Republican tax package flowing disproportionately to the richest of the rich," the report continues. "Even a tax break that was supposed to aid poor communities — an initiative called 'opportunity zones' — is being used in part to finance high-end developments in affluent neighborhoods, at times benefiting those with ties to the Trump administration."
The Times also reports the gutting of the tax bill has only now become wholely apparent, noting, "Two years after the tax cuts became law, their impact is becoming clear. Companies continue to shift hundreds of billions of dollars to overseas tax havens, ensuring that huge sums of corporate profits remain out of reach of the United States government," while adding that the IRS is taking in "tens of billions of dollars less in corporate taxes than Congress projected."
You can read more details here.