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How The Tax Bill Will Impact Silicon Valley: Great For Big Tech, Good For Startups

The $1.5 trillion tax bill passed by the House and Senate has been called a gift to corporate America, with a sharp reduction in the corporate tax rate from 35% to 21%, the retention of significant loopholes and deductions, and the ability of pass-through businesses to deduct 20% of the first $315,000 of earnings. But it’s especially generous for the giants of Silicon Valley. Already, tech companies paid an average tax rate of 24% over the past decade, below the 29% average tax rate for companies in the S&P 500. That’s less in taxes than every other industry—which includes finance, healthcare, and energy—in the country, according to an analysis by Zion Research Group. For example, Hewlett Packard Enterprise only pays an effective tax rate of 12.6% , reports the Silicon Valley Business Journal . And now it promises to get even better. Related Video: Here’s How Tax Reform Will Shake Out For Silicon Valley Some of the bill’s provisions will deliver a windfall to tech giants, allowing them to bring their huge piles of overseas cash back to the United States at a greatly reduced tax rate of 15.5%. The big five tech firms–-Apple, Alphabet, Amazon, Facebook, and Microsoft–- currently have a combined $457 billion held in foreign subsidiaries, reported Fast Company ‘s Mark Sullivan last month. To push for that reduced rate, they spent a lot of money on lobbyists, increasing their spending in the third quarter of 2017 by 24.3% (compared to the same quarter in 2016).  Microsoft alone had 81 lobbyists from 16 different firms (and Amazon had 64 lobbyists)  working for them to influence Congress specifically on tax issues in the first three quarters of 2017, according to Public Citizen. The bill includes a 10.5% tax on future foreign profits, which benefits the tech giants but that doesn’t help smaller startups, who will pay the usual 21% corporate tax rate since most of them make their money in the United States

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How The Tax Bill Will Impact Silicon Valley: Great For Big Tech, Good For Startups

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