When Donald Trump became president, he declared it was time to get America's corporations to bring home some of the $2.5 trillion cash that they had sitting in lower-tax countries. Trump maintained that by bringing cash home, corporations would invest more in America, leading to economic growth and also more jobs and higher pay for American workers.
Apple Inc. provides an example of a global company that has benefitted from tax avoidance policies. Not only are Apple's iPhones, iPods, and other products high quality and popular throughout the world, but the firm's designers and engineers have a well-earned reputation for creativity. Apple performs most of its product design, software development, and other high-wage functions in the United States. The firm has typically reported only about 30 percent of its profits as being from the United States. Why? To reduce its taxes, Apple designs its business to locate as much profit as possible in those countries where taxes are low. As of 2017, Apple had accumulated foreign profits of over $250 billion, stashed away in offshore accounts and not subject to higher U.S.  corporate taxes. These profits would be subject to U.S. taxes only when they were brought home (repatriated). Although Apple's tax avoidance practices were legal under the U.S. tax system, critics said that they were unfair and should be reformed.
Led by President Trump and congressional Republicans, in December 2017 the Tax Cuts and Jobs Act was signed into law. Major elements included reducing tax rates for businesses and individuals. Concerning corporate taxes, the act permanently reduced the federal corporate tax rate from 35 percent to 21 percent, while some related business deductions and credits were decreased or eliminated. This brought the U.S.  corporate tax rate closer to that of countries like Canada, which had a 15 percent corporate tax rate, or Ireland, which has a 12.5 percent rate. Also, the act changed the United States from a global to a territorial tax system. Instead of a corporation paying the U.S.  tax rate (35 percent) for income earned in any country (less credits for taxes paid to that country), each subsidiary would pay the tax rate of the country in which it is legally established. Finally, the act provided a onetime tax holiday that applied to the repatriation of profits of overseas subsidiaries of American corporations. Under this tax holiday, corporate income brought back to the United States is taxed between 8 and 15.5 percent, instead of the previous corporate tax rate of 35 percent. Simply put, the intent of the Tax Cuts and Jobs Act was to make it more attractive for both U.S.  and foreign multinational corporations to invest in the United States. This would contribute to economic growth, more jobs, and higher wages for Americans. But there was no guarantee that corporations would use the tax break to invest in American workers. Instead, would the tax break be used to increase the dividends of corporation stockholders or raise executive pay? 

In January 2018 Apple Inc. announced that it would pay a one-time tax of $38 billion on its overseas cash holdings and increase investment spending in the United States. The firm said that it would invest $30 billion in capital spending in the United States over five years that would create more than 20,000 jobs. Apple noted that it would establish a new campus, which would house technical support for customers, and invest $20 billion in data centers across the country. Apple cited the corporation tax cut as the reason for its behavior. Donald Trump praised Apple, stating that his policies allowed the company to bring massive amounts of money back to the United States. At the writing of this text, it remains to be seen how other corporations will react to the tax cut.

What do you think? Do you feel that The Tax Cuts and Jobs Act of 2017 will be successful in attracting corporations to invest in the United States? Will the corporate tax cut promote economic growth, resulting in more jobs and higher wages for Americans?