The White House and top lawmakers are discussing an overhaul for taxation of multinational corporations, according to the Wall Street Journal. The tax reform talks are happening as part of an effort to find funding for the highway bill and address various issues that have developed as US businesses earn cash overseas.
Overseas cash has become an increasing problem as corporations earnings are sitting offshore. If the businesses repatriate the cash into the United States, it will be taxed at a higher tax rate. Hundreds of billions are reportedly parked offshore to avoid paying U.S. taxes.
Additionally, cross-border reverse mergers during major acquisitions have become more popular in order to lower the tax rate of the resulting entity. They received the nickname corporate inversion. Until the IRS changed the rules to make them tougher and less profitable, they were going like gangbusters.
An overhaul of the system could allow the government to fund spending on highway transportation by imposing a one time tax on the repatriation of overseas cash. Among the other proposals discussed are the elimination of corporate taxes for earnings outside the United States.