Skip to comments.Firms Face New Tax Curbs
Posted on 05/04/2009 5:21:03 AM PDT by reaganaut1
The Obama administration will roll out details Monday of what aides are calling a far-reaching crackdown on offshore tax avoidance, targeting many U.S.-based multinational corporations and wealthy individuals.
President Barack Obama will flesh out a proposal included in his February budget blueprint seeking to curb the practice of parking foreign earnings in offshore tax havens indefinitely. By some estimates, $700 billion or more in U.S. corporate earnings have accumulated in overseas accounts in recent years.
The plan to be announced Monday will go further. It aims to change the legal treatment of offshore subsidiaries and structures that companies have used to avoid not only U.S. taxes, but taxes in other developed countries as well.
In addition, the administration will strive to tighten rules that have encouraged thousands of Americans to open offshore bank accounts in an effort to duck U.S. taxes. The plan would increase information reporting and tax withholding as well as penalties, and make it harder for foreign account-holders to win cases in court. The administration promised new enforcement tools to crack down on tax-haven abuse.
"What we really have is a system that is in many ways broken," a senior administration official said Sunday, one that "allows people to play games...to almost completely avoid paying taxes on active foreign earnings."
The sweep of the administration's plan took some tax experts by surprise, and foreshadows potential fights with big businesses later this year over some of their most cherished breaks, particularly as Congress looks for revenue to pay for new initiatives.
"There absolutely will be" opposition from business, particularly if the administration doesn't allow a suitable adjustment period, said Phil West, a lawyer with Steptoe & Johnson LLP, who was international tax counsel for the Treasury Department under President Bill Clinton.
(Excerpt) Read more at online.wsj.com ...
The corporate tax code is complicated enough that there probably are loopholes to be closed, but this should be done simultaneously with lowering tax rates. The Dems are just looking for grab money for their agenda.
“”There absolutely will be” opposition from business...”
Gee, ya think?
If you’d do away with the confiscatory tax policy, businesses would actually STAY IN AMERICA.
Economics 101: Whatever activity you levy a tax on, you will get less of that activity.
Therefore businesses will find a way to avoid this tax...keeping Obama and Co. from reaping any benefit.
Long Live the Welfare State!
How will Wall Street respond to these changes?
Beware these firms don’t decide to ‘park’ their headquarters right out of America.
Or the foreign arm simply splits off.
And there it is. - We are hiding the fact that America is producing less and less as Socialist tax programs forces real industry to leave America.
Does anyone know anything really produced here anymore?
Most heavy industry is gone. - killed by union demands and endless government policies that make it cheaper to make steel, for example, and ship it halfway around the world than to manufacture it here.
Stanley Tools is gone. Great job Congress.
This is so egregious that it has to be the agenda planned all along. - Nobody could be this consistently stupid over 5 decades as industry flees and immigration soars.
Anyone who does not see where this is going is just not looking.
I think this is posturing, performing for the choir. Congress, especially the senate will not kill their constituents business. The off shore money is foreign profit many think is not taxable anyway.
Less than 10 percent chance this will pass the house and senate. Add this idea to the cap and trade, gun confiscation, passenger train initiative, etc. junk pile.
Look for “Internet use” and “Internet sales” taxes too.
Maybe you should also let everybody know how long you've been living in Dreamland....
Whenever they manage to get Franken sworn in, the only "constituents" that will count is their prime contributors.
Little issues like voting "correctly" are sure to be addressed before too much time passes, so the rest of us can just assume our righteous place as a disenfranchised part of the revenue stream.
And...limit ALL of these assholes to 2 terms! Just like the prez!
I recommend they move to Ireland, where the corporate tax rate is 12.5%.
In the finest Obama Admin tradition, it will probably be another 1,000 page document that the mind-numbed Congress & Senate will vote on without reading it as usual.
Probably will have all sorts of unnoticed little items from making Chave..er Obama El Presidente For Life, to jailing all domestic terrorists such as U.S.military veterans and Republicans, to giving instant citizenship and voting rights to all illegals, whether they are currently in the USA or not here yet.
Sorry for the cynicism, but the Obama Regime is proving to be the most corrupt and despotic Admin ever. The 4th Reich, here we come.
......Whenever they manage to get Franken sworn in, the only “constituents” that will count is their prime contributors. ......
Which happen to be those same corporations with repatriated profits operating under tax laws formulated and reformulated by the Senate
“The Obama administration will roll out details Monday of what aides are calling a far-reaching crackdown on offshore tax avoidance,...”
Panama just elected its new president yesterday. We are very pleased. He is a mature, wealthy business man. Ricardo Martinelli was educated in the U.S. He owns many supermarkets. He is a multimillionaire entering the presidency and not the other way around.
He will not hesitate to tell that cheeky Kenyan bastard to go to hell and to use the Horn to go from one coast to the other. I would. The heck with treaties.
Second, squirreling money away into secret accounts just screams of impropriety in one form or another.
So, how bout....scrapping the current tax code, easing federal regulation on business.
Yeah, the system is broken all right. Our tax code makes no sense at all. We have very high rates for everyone, but with special reductions based on how much a special interest can afford to buy with campaign contributions.
And does anyone wonder why there is $700B offshore? You think putting a tax on it is going to bring it back? Nope, you are just going to see the corporations pull out of America. Heck, we’re all broke, in hock and about to stifle all productive activity under the wet blanket of cap & tax. No more money to be made here.
Do you really think that the politicians will give up the income tax? If the FairTax (or any of its consumption-based alternatives) are adopted, the most likely situation is that the U.S. household will be faced with both the "Fair Tax" AND the income tax, in addition to payroll taxes that will likely be increased anyways due to Congress' continued raiding of Social Security funds.
The proper solution to the present Government is to freeze its expansion on all fronts, no exceptions, and to shrink it down to its Constitutional size, while sunsetting income and payroll taxes...not implementing a "fair" tax. [Whenever political groups start using the word "fair" you know something is up, since "fair" is a very loose and subjective term.]
Just remember, if paying taxes is so patriotic [something implied by Sen. Grassley's quote in the article, and Grassley is a Republican] then in order to be wholly patriotic, everyone in the United States ought to pay 110 percent of their income, wealth, etc. into the federal treasury.
What's a good country to look for a job, anyone know?
They soon will be nonexistent here!
Oh...believe it. Just watch them do it.
Obama just had a press conference, and made it clear he wants money that does not belong to him. And he wants it now.
Wealth is going to be confiscated.
Thank you Gabrial for your insight.
You have it pegged to a tee, my FRiend!
Along with personal freedom.
Atlas Shrugged ping
Obama’s Newest Tax Proposal is a Declaration of War on U.S. Competitiveness
Date: Monday, May 4, 2009, 12:31 PM EDT, 12:31 PM EDT from Grover Norquist
President Obama and Treasury Secretary Geithner have unveiled yet another tax hike proposal — a declaration of war on American competitiveness.
America has the highest corporate income tax rate in the developed world. The United States is tied with Japan for one very dubious honorhaving the highest corporate income tax rate in the developed world. According to the OECD, the United States has a combined marginal corporate rate of nearly 40 percent. This compares very negatively to our European competitors average rate of 25 percent. The Republic of Ireland stands in the starkest contrast, with a corporate income tax rate of 12.5 percent. In the developing world, rates of 10 or 15 percent are commonplace.
America is the only developed country that double-taxes the international profits of our own companies. If an Irish company earns a profit in France, it pays the French corporate income tax, and nothing else. But if a U.S. company earns that same profit in France, it must pay the French corporate tax and the U.S. corporate tax (minus whatever was paid to France). So not only does the U.S. impose the highest corporate rate in the world, it makes sure that this rate is applied to both domestic and international profits. This is called a worldwide taxation system, and is unique to the U.S.
Recognizing the problem this creates, Congress has crafted a confusing set of exclusions, deferrals, deductions, and credits on international profits. In general, U.S. companies can avoid paying this double-tax until they repatriate the profits back to the U.S.
By seeking to take away these double-tax band-aids without lowering the corporate rate substantially or fixing the global taxation scheme, Obamas proposal will shove jobs and capital out of America and into foreign countries. Obamas budget and Congressional tax-writers have been clearthey want companies to pay the full corporate rate as soon as the international profit is earned. In a global economy, companies dont have to take this lying down. Its a relatively-simple matter for a U.S. company with an Irish subsidiary to become an Irish company with a U.S. subsidiary. The Obama plan will force thousands of companies to make this job-killing decision. Companies that export goods will soon start exporting jobs.
The U.S. should tax our companies the way the rest of the world taxes theirs—territoriality. The rest of the developed world has figured this out: if they want to retain jobs and capital in their countries, they have to adopt territoriality. This means that companies only pay corporate income tax in the country where the profit is earned. The U.S. partially tried this in 2005, when companies were allowed to repatriate deferred foreign earnings at a 5.25% ratefar lower than what they would have to pay otherwise. The result was a one-year infusion of $318 billion in capital to the United States, resulting in $17 billion in additional corporate income tax payments, and the creation of thousands of new jobs.
The U.S. needs to lower our corporate income tax rate to become more competitive. American employers are competing globally with Irish, British, German, etc. companies. It makes no sense to saddle our employers with the highest corporate rate in the world. At the very least, we need to lower our corporate tax rate to 25 percent or less. This simply begins to make our tax treatment of large employers somewhat comparable to our European competitors. When combined with territoriality, this move would begin to change the corporate tax culture in the U.S. from a jobs killer to a jobs magnet.
I have been around long enough to think this will eventually be watered down if not withdrawn OR a new tax work-around will be created. In the process, the US’s biggest corporations will pour money into the Dem party coffers (protection money) and all will be ok on both sides. Strangely silent is C. Schumer (D-Wall Street) who I predict will ride in on a white horse and somehow go to bat for the corporations, at least those contributing to HIS coffers.
Obviously, Obama talks about US jobs lost only when it has to do with Republican policies. He could not wait to get his Swindle-Us bill with e-verify and restrictions on hiring illegals removed, so he could give taxpayer money to illegals.
But if amnesty has passed under Bush, Obama would have blamed Bush for the loss of US jobs.
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