Jeff Paravano, Paul Schmidt Comment on Proposed Republican Tax Framework

Partners Jeff Paravano and Paul Schmidt are quoted in a story published Sept. 29, 2017, in Bloomberg BNA’s “Daily Tax Report.” The article, “Framework Raises Concerns about Repatriation, Minimum Tax,” reports on reaction to the proposed Republican tax reform framework.

Paravano noted that clients are pleased about the two-tiered rate, which he said is likely to lead to a lower rate overall. He cautioned, however, that if the rate ends up being too high after the dust settles, companies that had no intention of bringing foreign earnings home could sue the government by arguing the U.S. is imposing a retroactive tax. “Even a bifurcated rate doesn’t change the fact that many companies were not planning to bring the money back, ever,” Paravano said.

Commenting on the proposal to limit the ability of multinational corporations to deduct net interest expenses in exchange for current expensing, Schmidt said, “A move to a territorial system has to be coupled with some limitation on interest deductibility. Otherwise, taxpayers could lever up the U.S. to support what is essentially tax-exempt offshore earnings.”

Schmidt added, “This is a must-do legislative item for Republicans. There is not a lot of time this year to sort through the complexities and details of actual legislation, but with considerable effort it could be done.”

Read the article (registration required).

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