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First 100 Days And then there’s … The best notes and quotes from our panel of experts Our experts weighed in on some of the big issues.

NJBIZ: We’ve heard it before. If all the big companies were forced to bring their profits back to the U.S. — and invest them here — our economy would soar. But, how do we accomplish that? What rate is fair? And, most importantly, what are the unintended consequences? Is repatriation of profits a cure-all for our…

NJBIZ: We’ve heard it before. If all the big companies were forced to bring their profits back to the U.S. — and invest them here — our economy would soar. But, how do we accomplish that? What rate is fair? And, most importantly, what are the unintended consequences? Is repatriation of profits a cure-all for our tax ills?

Frank Brunetti, Scarinci Hollenbeck

“It’s in the proposal. The so-called repatriation rate is supposed to be at 10 percent, but there’s been very little talk (so far). But, clearly, there should be a preference for the repatriating of funds offshore. The country has been studying for quite some time about going to a territorial tax system. Right now, we tax on worldwide income, but when you have entities offshore in low-tax jurisdictions, they are going to leave the funds offshore and invest offshore. Why bring it back if you are going to be taxed at 35 percent?

“The worldwide tax system that we have actually encourages corporations to do inversions and move out of the United States and set up shop in Ireland or the Bahamas or great places for corporate taxes. By going to a territorial system, which would have to be mandatory, it would mean that all future revenue, no matter where it was earned, was subject to future taxation. It would be a smart thing to do. There would be a pushback from the multinationals, but it is an intelligent, common-sense provision that should be addressed.”

Michael Greenwald, Friedman LLP

“That’s why it won’t happen.”

Brunetti

“If you think back to the campaign, one of the components of the infrastructure plan that President (Donald) Trump proposed when he was a candidate was to finance it through repatriation. We were going to take all this money that was offshore, bring it back onshore, tax it at 5 percent, and there would be enough there to provide the money required to do the infrastructure work he proposed to do. That somehow has gone away.

“There would be a justification and a rationale and a political will for this. The winners would be the construction companies and the people who would be employed doing the infrastructure work. And there would be some benefit to the companies who have the cash offshore, as they could use it to run their business in the U.S., or give to their shareholders, which would give some boost to the economy. So, if you want to talk about something where you can’t really identify a loser, that’s something that’s almost a win-win-win, which is why it won’t happen.”

NJBIZ: OK, we’ll throw it out. Why is there a corporate tax at all? Would the country be better served just to eliminate it?

Michael Greenwald, Friedman LLP

“There have been attempts in the past to get rid of the corporate income tax, and there’s probably some economic justification for that still. There’s a feeling that corporations are really nothing more than an aggregation of their shareholders and that you can both influence economic behavior and corporate behavior by eliminating the corporate tax and tax the shareholders on the income of the corporation. The problem with that is there are so many other corollary sections of the tax code — on mergers and acquisitions, on employer-provided health insurance. All these other things feed into what we call corporate taxation. Merely eliminating the tax at the corporate level would make things more complicated, not less, because we’d have to figure out how to deal with all these other provisions.”

NJBIZ: OK, is anything going to get done? And, if so, how will it happen?

Michael Greenwald, Friedman LLP

“One of the concerns is that the Republicans have been talking about doing whatever tax reform they do through the reconciliation process. For those of you geeky enough to pay attention to the inner workings of the U.S. Senate, you know that clearly. In order to pass legislation that involves taxes or revenues, it’s either got to be revenue-neutral, which means they can pass it with just a simple majority, (or) if not, they are going to need 60 votes, and it looks like right now, they are not going to get the Democrats to go along with it. The problem with passing it through reconciliation is that whatever they pass has to expire within 10 years. If you remember back to the (President George W.) Bush tax cuts at the beginning of the century, all those things expired when President (Barack) Obama came in, and he had to deal with what happens when these provisions expire.

“They talk about writing off capital investments and not allowing interest deductions. Those things often extend beyond 10 years, so now how is that going to be treated if they go down the road of reconciliation? And some of the Senate rules, depending on the size of the revenue loss, could be less than 10 years. They say watching legislation is like watching sausage being made. I think that’s going to happen here. It’s going to be somewhat of a messy process, and Trump with his strategy that he’ll throw out a couple of things and start his negotiations and see where we end up. Of course, he proposed many things during his campaign, and what actually might happen, may not look like anything he proposed.”

Frank Jones, Mints Insurance Agency

“I’ve found over the years that the most common-sense things are not taken care of when they could be or should be because of lack of political expediency. I think, eventually, what we’ll find is that there was a reason, obviously politically, for that not to happen. (Tax changes are) too clear of any easy way to feed the economy of the United States that there has to be some unknown, behind-the-scenes decision not to pursue it. And I think it won’t be pursued from this administration, until it is politically expedient.

“No one really knows what to expect. The most appropriate answer is, with absolute honesty, I really don’t know what’s coming down the pike.”

Tom Bergeron

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