Latest news with #taxpolicy
New York Times
3 hours ago
- Business
- New York Times
This Loophole Buried in Trump's Bill Is Anything but Beautiful
It is hard to think of a less coherent pair of policies: President Trump's tax policy encourages the very offshoring that his tariffs are intended to stop. Take the more than $600 billion pharmaceutical industry. Over the past few months, Mr. Trump and his associates have repeatedly criticized companies' moves to offshore much drug making, particularly to Ireland. 'We can't be beholden and rely upon foreign countries for fundamental things that we need,' Commerce Secretary Howard Lutnick said on April 13. But the tax incentives in Mr. Trump's 2017 tax and spending package helped generate this problem in the first place — a problem that would continue under the Republican bill under consideration. Mr. Trump's Tax Cuts and Jobs Act created a loophole that made it far more profitable for the pharmaceutical giants, including Eli Lilly, Pfizer, Johnson and Johnson and Merck, to manufacture some of their most profitable drugs in Ireland. Unsurprisingly, that is what happened, with America's imports of pharmaceuticals soaring to $250 billion in 2024, way up from $110 billion back in 2016. American firms now report earning about $350 billion in profits annually in the world's major centers of corporate tax avoidance, which include Ireland, Luxembourg, Singapore and a handful of others. And while the major drug companies have mastered the art of taking advantage of the loopholes created by the 2017 law, semiconductor equipment producers and other Big Tech companies use the same special tax break. Fortunately, it isn't too late to make sensible changes that would raise revenue and get rid of this strange incentive. Republicans tend to blame Ireland's lower corporate tax rate for the proliferation of corporate tax avoidance, but the real incentive comes from this obscure corner of our tax code. It offers a far-lower 10.5 percent tax rate for global profits if a global firm moves the profits from its intellectual property offshore. The tax rate for domestic profits, in contrast, is 21 percent. The tax break was created by Republicans who were searching for a compromise that would stop companies from moving their headquarters overseas without fully ending tax competition and the associated pressure on U.S. corporate tax rates. Want all of The Times? Subscribe.
Times
11 hours ago
- Business
- Times
Labour's tax strategy under fire as Reeves defends fiscal rules
The chancellor has defended Labour's record as the party of business and its fiscal rules after controversial tax rises, saying the government had stabilised the economy and enabled interest rate cuts. Rachel Reeves told The Times CEO Summit that the government had achieved its 'number one job' to return economic stability after the 'turbulence' of the 'previous decade'. The contentious decision to raise employers' national insurance contributions in October's budget provoked a sharp backlash from business leaders, who had been courted by senior Labour figures in the run-up to July's general election. Bosses have since warned of hiring and investment cuts, while the decision is still being felt in the jobs market and in sentiment.
Daily Mail
2 days ago
- Business
- Daily Mail
Rachel Reeves is waging 'war on aspiration' and killing off growth with taxes, business leaders warn
Business bosses have turned on Chancellor Rachel Reeves for waging 'war on aspiration' and killing economic growth with taxes. Billionaire Sir James Dyson, in a blistering attack on Labour, yesterday accused the Government of being 'out to destroy' and punish wealth and job creators. He added: 'There is a war on aspiration and it's time we fought back.' John Roberts, boss of white goods retailer AO World, also criticised the Chancellor's policies, including her controversial National Insurance hike, saying they are 'not a growth engine'. The attacks come as Ms Reeves reportedly weighs up a U-turn on her axing of the non-dom tax status in a bid to halt an exodus of Britain's wealthiest residents. And they follow a report from the Confederation of British Industry (CBI) that the economy will 'muddle through' this year and next. The CBI downgraded its forecast for UK economic growth this year from 1.6 per cent to 1.2 per cent, and from 1.5 per cent to 1 per cent for next year. In the wake of those figures, Sir James condemned a raft of Labour policies, including changes to inheritance tax, non-doms and VAT on school fees. He hit out at Labour's employment rights Bill that includes proposals to expand the grounds for unfair dismissal and increase sick pay costs. It would also ban zero-hour contracts, strengthen flexible working rights and scrap some trade union restrictions. Sir James wrote in The Sun: 'Labour has ramped up employer National Insurance, triggering job losses, stopping investment and hitting workers hardest. 'New employment laws granting employees ever more rights will mean tribunal claims will rocket. Aspiring employers, coping with punitive and costly claims, will stop hiring. Even more jobs will disappear. Ambition and growth are being killed. 'There are plenty of ambitious young entrepreneurs in this country. But if the desire to be successful is punished, with tax and red tape, the talented will take their ideas and leave.' Mr Roberts told the BBC: 'If you put taxes on businesses and you put taxes on employment, that isn't a growth engine.' It was reported last month the UK has lost the largest number of billionaires on record. Reform UK leader Nigel Farage joined the assault yesterday by mocking Sir Keir Starmer as Labour slipped to third place in a poll. He referenced a recent TV interview in which Sir Keir was asked 'what was his biggest mistake' and replied: 'We haven't always told our story as well as we should.' But Mr Farage said: 'Do you know what his biggest mistake was? Going into politics. 'Because if you go into politics you do it because you believe in something. This bloke doesn't believe in a single thing other than the niceness of human rights law, international law and the north London set.'
Entrepreneur
3 days ago
- Business
- Entrepreneur
Why New Tax Rules Could Be a Game Changer for Your Business
With the One Big Beautiful Bill Act making its way through Congress, entrepreneurs need to be ready for significant tax policy changes. Opinions expressed by Entrepreneur contributors are their own. No entrepreneur wants a surprise tax bill — especially when every dollar matters for growth. Staying ahead of tax policy changes is one of the smartest ways to protect your bottom line and avoid disruptions. With the Senate now reviewing the One Big Beautiful Bill Act, Congress is moving closer to enacting one of the most significant shifts in U.S. tax policy in recent history. If passed, the legislation would expand — and in many cases, strengthen — existing incentives for entrepreneurs to reinvest in equipment, hire more staff, and scale with confidence. Here's what's coming — and how you can position your business for what's next. Related: 4 Tax Strategies Every High-Earning Entrepreneur Needs to Know for 2025 The government wants you to invest in your business — now more than ever The 2017 Tax Cuts and Jobs Act (TCJA) brought sweeping changes to the tax code, many of which aimed to boost business investment. But those provisions were set to expire by the end of this year. The new House bill extends and enhances several of those benefits. One major update? The Qualified Business Income (QBI) deduction gives many sole proprietors, partnerships, S corporations, and some trusts and estates a tax break. Under the TCJA, that deduction was 20%. The new legislation would increase it to 23% and make it permanent, putting more cash directly into the hands of small business owners. Another key change: entrepreneurs could again deduct domestic R&D expenses immediately, restoring a popular provision that had expired. While this update would only run from 2025 through 2029, it marks a meaningful shift. Countries like South Africa and Singapore already offer enhanced R&D deductions of 150% to 400% — this change helps U.S. businesses stay globally competitive. The bill also brings back full bonus depreciation, allowing businesses to deduct 100% of qualifying assets like equipment, software, and property at the time of purchase. That means you won't need to spread deductions out over time — you get the full benefit upfront. The government is shifting what it wants you to invest in Governments shape economic behavior through tax policy. In recent years, U.S. incentives have focused heavily on renewable energy and emissions reduction. Business owners have used tax credits to install solar panels or invest in electric vehicles at lower costs. But the One Big Beautiful Bill Act, backed by the Trump administration and a Republican-led Congress, signals a pivot. Incentives are shifting toward American manufacturing and domestic fossil fuel production. That means it's time to reexamine your tax strategy. If you've invested in green initiatives — or plan to — you'll want to understand how these new priorities could affect your bottom line. For example, while EV tax breaks may fade, the bill introduces a new $10,000 deduction on loans for vehicles assembled in the U.S. Make sure your strategy aligns with these evolving incentives. Personal tax changes will impact you and your employees The bill also raises the standard deduction to $16,000 for individual filers and $32,000 for joint filers — up by $1,000 and $2,000, respectively. That's welcome news for many employees and for entrepreneurs who don't itemize. Seniors get an even better break. The legislation includes a temporary $4,000 bonus deduction for individuals over 65 with a modified AGI under $75,000 (or $150,000 for joint filers). However, that bonus expires in 2028. If you live in a high-tax state, you'll want to note the changes to the SALT deduction (state and local tax). The current $10,000 cap would jump to $40,000 in 2025 for households earning under $500,000 and gradually increase through 2033. Above that threshold, the deduction phases out entirely. There are also proposed exemptions for tips and overtime pay, which could change how you approach payroll and compensation. These details are worth discussing with a tax advisor to ensure you're optimizing for both compliance and competitive hiring. Related: 4 Tax Tips That Will Give Your Business an Edge and Save You Money in 2025 Thinking of starting a business? Now may be the best time The U.S. has a long tradition of using tax policy to support entrepreneurship, and this bill continues that legacy. If you've been sitting on a business idea, the new provisions could help you get started with lower upfront costs and stronger long-term incentives. At the end of the day, every dollar saved on taxes is a dollar you can reinvest — whether in talent, technology, or new offerings. Smart planning now will ensure your business is ready for what's ahead.
New York Times
4 days ago
- Business
- New York Times
Business Lobbyists Scramble to Kill $100 Billion ‘Revenge Tax'
Business lobbyists are working to kill a measure in the Republican tax policy legislation that would punish companies based in countries that try to collect new taxes from American firms. The push comes as Senate Republicans are preparing to unveil their domestic policy bill on Monday, which will ultimately need to be passed and merged with the legislation that the House passed last month. That bill imposes a so-called revenge tax on foreign companies that try to enforce the terms of a 2021 global minimum tax agreement or impose digital services taxes on American technology companies. The legislation would substantially increase the tax bills for many foreign companies that operate in the United States, raising more than $100 billion over a decade. Critics argue that the provision would chill foreign investment at a time when the Trump administration is trying to attract international money. 'I think the president has been pretty unequivocal on where he stands on wanting more investment into the U.S. from international companies,' said Jonathan Samford, chief executive of the Global Business Alliance, which lobbies on behalf of international businesses in the U.S. Mr. Samford added that the measure 'directly contradicts the president's investment vision.' The legislation is poised to reignite international tax and trade wars that have been on hiatus as policymakers around the world grapple with how to overhaul the global tax system. It has also stoked anxiety among Wall Street investors and is expected to be a topic of discussion as leaders of the Group of 7 countries gather in Canada this week for a summit. Since taking office, President Trump has made clear that he wants nothing to do with a 2021 deal brokered by the Biden administration that aimed to rewrite the rules of how the world's largest companies would be taxed around the globe. That deal, which was agreed to by the G7, created a new global minimum tax rate of at least 15 percent that companies would have to pay, regardless of their headquarter location. The aim was to prevent countries from lowering their tax rates as a way to attract multinational corporations, creating a 'race to the bottom' in taxation that left nations with fiscal shortfalls. Want all of The Times? Subscribe.
