https://home.treasury.gov/system/files/136/MadeInAmericaTaxPlan_Report.pdf
*Ending Offshoring and Profit Shifting Incentives: Strengthening the Global Minimum
Tax for U.S. Multinational Corporations
One of the most important objectives of the Made in America tax plan is to reduce incentives for the offshoring of American jobs while also limiting the ability of corporations to take advantage of corporate tax loopholes to shift their profits to low-tax jurisdictions.
The plan takes aim at offshoring through a series of reforms that reverse tax-based incentives for moving production overseas.
Perhaps the most consequential of these are fundamental changes to the GILTI regime introduced by the TCJA.
The Made in America tax plan would eliminate the incentive to offshore tangible assets by ending the tax exemption for the first 10 percent return on foreign assets. It would also calculate the GILTI minimum tax on a per-country basis, ending the ability of multinationals to shield income in tax havens from U.S. taxes with taxes paid to higher tax countries.
The plan would also increase the GILTI minimum tax to 21 percent (up to three-quarters of the proposed new 28 percent corporate tax rate, as opposed to the current one-half ratio).
In addition to these reforms to GILTI, the plan would disallow deductions for the offshoring of production and put in place strong
guardrails against corporate inversions. Overall, the stronger minimum tax regime would substantially reduce the current tax law’s preferences for foreign relative to domestic profits, creating a more level playing field between domestic and foreign activity.
The President’s plan would dramatically reduce the significant tax preferences for foreign investment relative to domestic
investment that are embedded in both the current GILTI and FDII regimes, including a near-elimination of profit shifting.21 Past
scholarship suggests that profit shifting costs the United States $100 billion annually (estimated in 2017, prior to the TCJA), or $60
billion at current rates, two-thirds of which is from the profit shifting of U.S. multinational companies.
Transitioning to a per-country GILTI minimum tax is estimated by scorekeepers at both the Treasury Department and the Joint Committee on Taxation to raise more than $500 billion in revenue over a decade—beyond the current estimated corporate tax revenues generated from the poorly designed GILTI regime.
In parallel to these efforts to eliminate profit shifting by U.S. multinational companies, proposals to repeal and replace the Base
Erosion and Anti-Abuse Tax (BEAT) would counter the profit shifting of foreign-headquartered multinational companies. All told, these proposals would bring well over $2 trillion in profits over the next decade back into the U.S. corporate tax base.