America's tax brackets changed this year, following the overhaul bill President Trump signed just before Christmas. One part of that plan has had the support of both Republicans and Democrats for years.... the effort to bring trillions of dollars back to the U-S from companies using offshore tax shelters. Joce Sterman takes a look at the havens, how they worked, and why they're now coming to an end.
President Trump: ‘We’re going to bring back probably 4 trillion dollars from overseas, nobody knows the exact number but it's massive it's over 3 trillion it could be 5 trillion.'
The idea of bringing all that corporate investment home has been something of a holy grail for several White House administrations. It was one of the first initiatives of the Obama Administration, and one of the last. What it took was a complete overhaul of the tax system, and a cut in the corporate tax rate from 35 percent to 21 percent.
David Williams, President, Taxpayers Protection Alliance: This country has done nothing with his corporate tax rate for years. Every other country has recognized the economic benefit of lowering taxes.
David Williams is President of the Taxpayers Protection Alliance.
Joce: Does this eliminate the need to go offshore with your money?
David Williams: Lowering the corporate tax rate absolutely eliminates the need to leave whether it's an inversion or just moving your company elsewhere. This eliminates that need and really that financial need.
That financial drive and how companies gamed the system was most recently exposed this fall by the so-called 'paradise papers,' named after the idyllic tropical islands where many companies hid billions of dollars in complicated shell schemes.
Sasha Chavkin, ICIJ Reporter: It's legal but it allows them to pay less taxes and to face less accountability than everyone else in America.
Sasha Chavkin is with the international consortium of investigative journalists. His team pored over 13.4 million documents, most of them coming from an elite offshore law firm called "Appleby," headquartered in Hamilton, Bermuda.
Sasha Chavkin: What Appleby does is creates and manages offshore companies to help them manage their financial affairs. So they set up paper companies in the Cayman Islands and Bermuda and the Isle of Man and other tax havens around the world to help their clients avoid taxes.
Tax havens aren't limited to paradise.
Tim Cook: We don't stash money on some Caribbean Island.
In the case of Apple for example, the paradise papers exposed the consumer tech giant had found another treasure island.
Sasha Chavkin: Apple CEO Tim Cook testified before Congress about Apple's tax practices and said very indignantly. Cook: We pay all the taxes we owe. Every single dollar. We not only comply with the laws, but we comply with the spirit of the laws. We don't depend on tax gimmicks. We don't move intellectual property off shore and use it to sell our products back to the United States to avoid taxes.
Sasha Chavkin: What the paradise papers show is ultimately Apple didn't end up on a Caribbean offshore island. It ended up in Jersey, which is an island in the English Channel. So what's very clear is that it continued its strategies of aggressively trying to use offshore to reduce taxes
Apple wasn't the only company outed in the paradise papers. Others include Nike and Allergan, the manufacturer of Botox.
David Williams: They have not broken any laws. He should not be embarrassed at all about what he has done.
Williams says American companies like Apple, in the past, have had a duty to their shareholders to optimize their revenue, and that usually meant finding a lower tax rate offshore. At 35 percent, America's was one of the highest in the world.
Joce: The biggest argument when people talk about something like the Paradise papers and the discovery that these corporations are putting their money overseas and they say the average American takes the hit here. Will that change as a result of this tax cut for corporations?
David Williams: The average American is going to benefit from this with the tax cuts. But on a bigger scale people are going to benefit from companies coming back to this country. Unemployment will continue probably to go down and we're going to see more revenue and really more economic growth. An expanding economy will help everybody and that's why this is so important is to entice business to come back here you know whether it's through lower regulations or lower taxes. But we need business to relocate back to the United States. We need money coming back to this country.
Walmart - the nation's largest private employer - increased the minimum wage for its employees and handing out bonuses of up to a thousand dollars. By some counts 125 companies are giving out those bonuses, including our parent company, Sinclair Broadcasting.. all citing the positive impact of the new tax structure.