Wall Street Journal, Deal for Carrier to Keep U.S. Plant Open May Hinge on Tax Overhaul:
President-elect Donald Trump’s campaign pledge to save jobs at a Carrier plant in Indiana was framed around free trade, but negotiations about corporate tax law changes could be just as important to any possible deal.
Representatives for the incoming administration, including Vice President-elect Mike Pence, have held wide-ranging policy talks with top-ranking executives at Carrier’s parent company, United Technologies Corp., said a person familiar with the discussions.
The discussions include the conglomerate’s plans to shift more than 2,000 jobs from Indiana to Mexico, but have covered other issues, including the company’s wishes for a tax overhaul that Mr. Trump and Republicans have promised to pursue early in his administration, this person said. ...
The incoming president’s goal is to show that he can keep some of his boldest campaign promises, and the CEO needs to keep peace with the federal government, a critical customer for products like its jet fighter engines. Military sales account for roughly 10% of the company’s $56 billion annual total, the company says.
United Technologies, like other globalized U.S. companies, also has large reserves of cash overseas—profits that corporations are waiting to repatriate to the U.S. until Congress cuts the level of tax they would pay. The company reported that 85% of its total cash, or more than $6 billion, was overseas, as of the end of 2015.
One idea backed by House Republicans but not Mr. Trump would be to create a two-tiered tax rate that would help companies that have used foreign profits for factories and other assets they can’t easily repatriate.
Large U.S. companies also want a lower corporate tax rate.
Given the variables of the company’s interests and the three-year window over which United Technologies planned to stagger the job cuts in Indiana, there is the potential for a deal, the person familiar with the discussions said.