Law360 Quotes Clark Armitage: Debate Over GILTI's Jobs Offshoring Incentive Continues

Since the 2017 tax overhaul was enacted, critics have claimed that the structure of its global intangible low-taxed income provision - especially its deduction for offshore tangible property - will encourage companies to move jobs out of the U.S.

 . . .

The bill's authors said basing the GILTI formula on depreciable property, or qualified business asset investment in the language of the law, is an administrable way to prevent an outflow of income shifting once the rest of foreign profits are exempt. But critics see a clear incentive for companies to move, or create, real operations and jobs outside the U.S. If tangible property goes up, the foreign tax bill comes down.

"You benefit from more QBAI offshore. Just the simple math tells you that," said Clark Armitage of Caplin & Drysdale.

. . .

"I haven't seen it. But it makes logical sense that it would play into some companies' planning," Armitage said.

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Excerpt taken from the article “Debate Over GILTI's Jobs Offshoring Incentive Continues” by Alex Parker for Law360 Tax Authority.