Final answer:
After the TCJA, U.S. companies are more likely to bring home foreign profits due to the new flat tax rate, as the law provides incentives for repatriation of earnings. This aligns with Laffer's principle where lower rates potentially increase tax revenue by expanding the economic activity. However, globalization has led to controversial effects on the job market and production capabilities.
Step-by-step explanation:
True, after the Tax Cuts and Jobs Act (TCJA), U.S. companies are indeed more likely to repatriate foreign profits due to a shift from a worldwide tax system to a modified territorial tax system, where they are not taxed on foreign profits unless they are brought back to the United States. The newfound flat tax rate on repatriated earnings significantly lowered the tax burden on multinational corporations, thus incentivizing them to bring earnings back to the U.S. This change was intended to stimulate the domestic economy by increasing investments, though the actual impact may vary based on each corporation's strategy and external economic factors.
Economist Arthur Laffer's principle suggests that in some instances, lower tax rates can lead to increased tax revenue, because such rates can stimulate economic activity, leading to a larger tax base and potentially higher total tax revenue.
Globalization has had complex effects on the U.S. economy and labor market, including job offshoring and a shift in production capabilities, which have spurred debates about corporate taxation and economic policy.