Tech, Trump see rare consensus with GOP tax plan

Tech, Trump see rare consensus with GOP tax plan
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President Trump and the congressional GOP have a surprising ally in their push for sweeping tax cuts: the tech industry.

Trump and the tech giants are frequently at odds. In their latest clash, Trump accused tech companies like Facebook this week of colluding with the media to undermine him in last year's presidential race.

But major technology firms and the Washington trade associations that represent them have come out in support of the GOP’s newly released tax plan and its cuts to corporate tax rates. 

Tech firms are squarely behind the tax plan so far, saying that the new Republican legislation will help them be more competitive in the global marketplace and boost innovation across the industry.

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“We're excited that framework takes a look at reducing corporate tax rates, a territorial system and repatriating funds,” says Tiffany Moore, vice president of political affairs at the Consumer Technology Association, Washington, D.C.-based think tank representing a slew of major tech firms. “We’re waiting for the details. We look forward to the legislative text.” 

Technology companies and trade associations say that they’re particularly fond of repatriation policies in the reform proposal. The GOP proposal calls for a one-time tax break on profits brought back from abroad, or repatriated, compared to the 35 percent such income would normally be subject to under current law. The plan would also make it mandatory that such offshore earnings be brought back to the U.S.

If the lower tax rates on repatriated earnings go into effect, it would be a lifeline at a pivotal time for tech firms, which have hundreds of billions of dollars stashed overseas.

Trump’s repatriation push comes at an opportune time for tech giants, with the European Union threatening to raise their taxes. The European Commission released a report last week outlining plans to increase the taxes it collects from U.S. technology companies. 

U.S. companies currently hold $2.6 trillion offshore. The technology sector, in particular, is holding large sums of money in Europe: Apple has $181 billion offshore, Microsoft holds $108 billion and Google holds $47.4 billion.

The proposed Republican plan would give companies another boost by cutting the corporate tax rate from 35 percent to 20 percent and would make the tax system territorial, meaning that only domestic earnings would be taxed. Technology firms say that these policies will help their business and the country as a whole. 

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“Smart tax reform is the best way to grow the economy and put more money in the pockets of the American people,” said Dean Garfield President of the Information Technology Industry Council, a Washington, D.C.-based trade association that represents major tech firms, including Amazon, Apple and Google. “It has been 30 years since most Americans have seen any real wage gain. That was also the last time we had tax reform.”

“The tech industry supports 15 million U.S. jobs — the Unified Tax Reform Framework will help create even more good-paying jobs here at home,” echoed Gary Shapiro, the president of the Consumer Technology Association. 

But while tech companies stand to gain hugely from the repatriation provisions in the tax plan, their support could be thrown off by other parts of the legislation. 

“The devil’s in the details,” a technology industry source noted, saying that tech might be less pleased when the actual legislation is released.

Microsoft has already sounded concerns about the administration’s priorities. The company’s president and chief legal officer, Brad Smith, said earlier in September that he wanted Congress to work on legislation restoring protections of the Deferred Action For Childhood Arrivals program, an Obama administration program that deferred deportation and provided work permits for immigrants brought to the country illegally as minors, before dealing with tax reform.

Microsoft declined a request for comment. 

Tech firms have traditionally been politically aligned with Democrats on issues like LGBT rights and climate change. On tax reform, though, the Democrats are decidedly less pleased.

Senate Minority Leader Charles SchumerCharles (Chuck) Ellis SchumerTo make the House of Representatives work again, make it bigger Reforms can stop members of Congress from using their public office for private gain Election Countdown: GOP worries House majority endangered by top of ticket | Dems make history in Tuesday's primaries | Parties fight for Puerto Rican vote in Florida | GOP lawmakers plan 'Freedom Tour' MORE (D-N.Y.) predicted that the tax plan is “so perverse in helping the wealthy and hurting the middle class, it will fail.”

And Rep. Ro Khanna (D-Calif.), whose district includes Silicon Valley, railed against the proposal.

“The tax reform proposal released today by the White House and congressional Republicans clearly demonstrates that they think it’s better to serve the interests of the very wealthy than everyday people,” Khanna said. “Shareholders and corporate executives do not need any more favors handed to them.”