In October 1962, at the height of the Cuban Missile Crisis,  John F Kennedy quietly signed into law the most extra-territorial tax system in the history of the human race. As the world faced MAD (Mutually Assured Destruction), it perhaps wasn’t the most important thing on the minds of American CEOs that week. Buried in the dark recesses of the US Tax Code, the Subpart F provisions for Controlled Foreign Corporations soon became the blueprint for advanced nations everywhere to enable their Treasuries to reach abroad and dip their hands into the profits of their residents’ foreign holdings.

Fast-forward 55 years, and America is blessed with a populist president who – to put it mildly – doesn’t do things quietly. Yet, last week’s House tax reform proposals spoke of a move to an anti-populist territorial tax system for Corporate America (Google translate: Render unto Caesar what is Roman), and – I, at least – do not recall hearing the Donald’s bellowing protests or observing his trembling orange mop.

Why not?

Possibly, because this is the most goddamed-extra-territorial tax proposal in the history of the human race. It is the mother of extra-territorial tax proposals. The message it sends to multinational Corporate America – especially the high-tech variety –  is: ‘You can bring your cash home any time you like, because we are going to find your profits in whatever foreign paradise they are sunning themselves, and we are going to nail them.’

The ingenious weapon they want to add to the ageing, but sprightly, Subpart F provisions is the invasive ‘Foreign High Return’ amount of controlled  foreign corporations. In a nutshell, the US Treasury will allow US-owned foreign companies to earn a reasonable return on their tangible property abroad, and tax the remainder at half the US corporate rate (ie 10% in the proposal) whether it is repatriated or not. This actually puts some vague sense into President Trump’s surprising remark to Japanese auto-manufacturers this week  that they should bring production to the United States. Of course, as any non-president-of-the-United-States knows, Japanese manufacturers already produce 75% of the vehicles they sell in America on American soil. Now that American car manufacturers will evidently have an incentive to produce ALL the cars they sell abroad in tax-friendly countries beyond the Statue of Liberty, it is perhaps only fair that the good old Japanese help out.

The foreign tax credit allowed in the US will be 80% of the tax paid, meaning that profits taxed at more than 12.5% should not be further taxed at home. Given the latest revelations in the Paradise Papers, this would mean that hi-tech companies not protected by exemptions due to normal returns on tangible property, will be taxed on an ongoing basis – albeit at a competitive rate.

In the meantime there will be a one-time tax on repatriating existing foreign earnings of 12% (cash etc) and 5% (illiquid assets).

And, if all this is not enough, just for the fun of bayoneting the wounded, a 20% excise tax is proposed on payments out of the United States.

My hunch is that the reason POTUS hasn’t been shooting off about all this is that he hasn’t quite absorbed it yet. That may not matter. Under the American system of government the chances of this, largely interesting, proposal passing are about as high as Donald Trump’s chances were a year ago today of winning the US presidential election.

Something to chew on.