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Obama seeks tax changes for U.S. firms overseas (No more deducting overseas operations expenses)
Reuters ^ | 5/4/2009 | Kim Dixon and Caren Bohan

Posted on 05/04/2009 5:24:34 AM PDT by SeekAndFind

WASHINGTON (Reuters) - President Barack Obama on Monday will propose changing provisions in the tax code that he says encourage U.S. companies to move jobs overseas, as part of a broader package aimed at saving $210 billion over 10 years.

Obama will seek to follow through on a campaign promise to change the tax treatment of American firms with overseas operations.

That portion of his plan -- opposed by such firms as Pfizer Inc and Oracle Corp -- would raise more than $100 billion in revenue over the next decade.

Obama vowed in a February address to the U.S. Congress to make the tax code more fair by "finally ending the tax breaks for corporations that ship our jobs overseas."

Currently, U.S. firms are allowed to defer paying taxes on profits earned overseas if they plow those profits back into their foreign subsidiaries.

Critics say those rules encourage businesses to bolster their foreign operations instead of creating jobs at home.

But an array of firms signed onto a letter to congressional leaders in March opposing changes to the so-called deferral provision, saying they would make U.S. businesses less competitive.

The letter was signed by 200 companies and trade associations, including Pfizer, Oracle, Microsoft Corp Johnson & Johnson and General Electric Co as well as the Business Roundtable and the U.S. Chamber of Commerce.

The letter said the firms would not be on a level playing field with international rivals, many of which are not required to pay taxes at home on overseas entities.

Senior U.S. officials who described Obama's plans said they were balanced and would not put excessive burdens on firms.

NO MORE DEDUCTING EXPENSES

A central provision would prohibit companies from deducting expenses supporting their overseas operations until they pay taxes on offshore profits.

(Excerpt) Read more at uk.reuters.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: businesstaxes; corporateincometax; multinationals; overseas; tax; taxes

1 posted on 05/04/2009 5:24:35 AM PDT by SeekAndFind
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To: SeekAndFind

How would this affect B.O.’s sugar daddy Soros?


2 posted on 05/04/2009 5:25:44 AM PDT by KeyLargo
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To: SeekAndFind

You watch how many US corporations relocate their headquarters to the Cayman Islands to avoid this one.


3 posted on 05/04/2009 5:26:52 AM PDT by Jagman
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To: SeekAndFind

So how much of this baloney is needed before Obama becomes persona non grata even among big moneyed Democrats?


4 posted on 05/04/2009 5:28:50 AM PDT by HiTech RedNeck (Beat a better path, and the world will build a mousetrap at your door.)
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To: SeekAndFind
I sure hope that part of the business community that supported Obama is happy with this. In looking at the list of companies that opposes this tax, such as Microsoft, my only response is-you wanted this guy and Obama made it clear he was going to change the tax laws regarding international operations.
5 posted on 05/04/2009 5:29:07 AM PDT by Maine Mariner
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To: KeyLargo

I am worried about American innovators and employers not Soros who is hedged for this. This is a disaster for US based MNC’c.....so they will become Dubai or China based....wait and watch the Gov slit their/our wrists and bleed the survivors dry through some other ill advised scheme to raise money for dinner in Chicago.


6 posted on 05/04/2009 5:29:15 AM PDT by colonialhk (Harry and Nancy are our best moron allies)
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To: Jagman

Yep... they just cease being US corporations. Way to go, Obummer.


7 posted on 05/04/2009 5:29:32 AM PDT by HiTech RedNeck (Beat a better path, and the world will build a mousetrap at your door.)
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To: Maine Mariner

Yes — they would have been financially much better off with McCain.


8 posted on 05/04/2009 5:30:41 AM PDT by HiTech RedNeck (Beat a better path, and the world will build a mousetrap at your door.)
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To: SeekAndFind

What will this do to the stock market?


9 posted on 05/04/2009 5:30:41 AM PDT by Notasoccermom
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To: HiTech RedNeck

Many of the big money Democrats are trust funders and this law may have little impact on their wealth and income.


10 posted on 05/04/2009 5:31:01 AM PDT by Maine Mariner
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To: SeekAndFind
...as part of a broader package aimed at saving $210 billion over 10 years.

It is a damn tax increase on US companies and the socialists call it a SAVING. They cannot stop lying, can they?

11 posted on 05/04/2009 5:31:03 AM PDT by jveritas (God Bless our brave troops)
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To: SeekAndFind

Oh Yeah...this will work. New regulations that will push the companies to move EVERYTHING to the most tax advantaged regions that can support their operations. I’d bet they’ll take the jobs with them...ya think?

Good job, 0bama. You charlatan gasbag.

It’s time to take back the country.


12 posted on 05/04/2009 5:32:25 AM PDT by PubliusMM (RKBA; a matter of fact, not opinion. 01-20-2013: Change we can look forward to.)
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To: Notasoccermom

As if Obama cared


13 posted on 05/04/2009 5:32:36 AM PDT by HiTech RedNeck (Beat a better path, and the world will build a mousetrap at your door.)
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To: PubliusMM

Well, I expect the lobbying on Congress to be faster and more furious than ever before. Congress may fold.


14 posted on 05/04/2009 5:33:46 AM PDT by HiTech RedNeck (Beat a better path, and the world will build a mousetrap at your door.)
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To: Notasoccermom
Probably the stock markets will go up. The worse the economic news the more the limousine liberals who control Wall Street will push the markets up in fake rallies to convince the public that Obama socialism is working great where in reality it is destroying our economy. Haven't you noticed the trend of bad economic news = up market in the last 7 weeks?
15 posted on 05/04/2009 5:34:38 AM PDT by jveritas (God Bless our brave troops)
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To: SeekAndFind

Obama doesn’t seem to understand that the multinationals owe alliegence to no country. If the rules get too onerous, they will just move their headquarters elsewhere.


16 posted on 05/04/2009 5:49:24 AM PDT by kabar
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To: SeekAndFind
I admit to being an ignoramus as far as business is concerned. But I wonder why anyone would put their capital into growing a business if the rules could be arbitrarily changed over night? It would seem that the only way you could be assured of making money would be to over charge for your products from the get go so that you could be assured of making some profit before the government gets wind of your nefarious actions and guilts, or taxes you out of business. Better to sit back and wait for government handouts.
17 posted on 05/04/2009 5:50:37 AM PDT by stayathomemom (Beware of cat attacks while typing!)
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To: kabar

Corporations don’t pay taxes. People do.


18 posted on 05/04/2009 5:51:15 AM PDT by scooby321
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To: jveritas

The stock market is up because companies are becoming leaner and more profitable.


19 posted on 05/04/2009 5:51:42 AM PDT by kabar
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To: Jagman

Yep. The dems should have seen this coming. It looks like some of the pharmaceutica companies are on this list. So - obama’s idea is to drive up health costs even more, apparently.


20 posted on 05/04/2009 5:53:17 AM PDT by ElayneJ
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To: SeekAndFind

If this puts a 100 billion dollars into the government coffers that means the consumer will be putting that hundred billion into those coffers.

I dont know much about economics, but I do know that.


21 posted on 05/04/2009 5:54:26 AM PDT by Venturer
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To: SeekAndFind
The US has the second highest tax rate in the world:


22 posted on 05/04/2009 5:54:42 AM PDT by Wyatt's Torch (I can explain it to you. I can't understand it for you.)
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To: scooby321

Ultimately they may not, but corporations do pay taxes and then pass them on to the consumers. The US has one of the highest corporate tax rates in the world. If it gets too high, corporations go out of business or they relocate.


23 posted on 05/04/2009 5:55:39 AM PDT by kabar
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To: kabar

Leaner = Less employees = higher employment rate.


24 posted on 05/04/2009 6:03:27 AM PDT by jveritas (God Bless our brave troops)
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To: kabar

I meant higher unemployment rate.


25 posted on 05/04/2009 6:04:46 AM PDT by jveritas (God Bless our brave troops)
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To: Jagman

That would pretty much be the plan.

The worse the economy gets, the more power they have.


26 posted on 05/04/2009 6:05:47 AM PDT by Boiling Pots (Barack Obama: The final turd George W. Bush laid on America)
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To: jveritas

Correct. It is like pruning a rose bush. Eventually, a leaner company can build on a stronger foundation, which then leads to increased employment. At least that’s the theory.


27 posted on 05/04/2009 6:06:04 AM PDT by kabar
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To: Jagman

HA! What is he going to do for his “poor” supporters when they start losing their jobs. Fun sticking it to those evil corporations, isn’t it. Dumbasses.


28 posted on 05/04/2009 6:09:29 AM PDT by ican'tbelieveit (Join FreeRepublic's Folding@Home team (Team# 36120), KW:Folding)
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To: SeekAndFind
That portion of his plan -- opposed by such firms as Pfizer Inc and Oracle Corp -- would raise more than $100 billion in revenue over the next decade.

B.S. No one will be around to pay those taxes. It's like saying that you'll raise the top rate to 99% and make a zillion dollars. These businesses will simply go under and be replaced by foreign businesses that will import the products as well.

29 posted on 05/04/2009 6:12:51 AM PDT by SampleMan (Socialism enslaves you & kills your soul.)
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To: SeekAndFind

Here is one possible consequence of this “money grab” by the gov’t—Shane, owner of Shane’s Pub in Cork, Ireland, reads about this proposed tax law change and immediately runs to the richest financier he can find. He asks for $XX billion to buy a US multinational company. Shane tells the financier he will be the new CEO of the corporation which will now be headquartered in Ireland. The payoff to the financier is in the high low tax rate arbitrage US to Ireland. A profitable corporation in the US has a net income vastly less than a profitable corporation in Ireland. With the signing of the check to buy the corporation, instant millions or billions of profits are created. The corporation is now an Irish corporation with operations in the US. Corporate taxes are paid in Ireland. The workers now report to Shane.

I just used Ireland as a fictional country with low corporate taxes but the principles are the same—this could lead to acquisitions of US MNC’s by people in low tax rate countries. It enables those countries an excellent opportunity to grow their corporate economies without having to undergo slow, costly organic growth.

Am I wrong? I would like a corporate/international finance expert’s opinion.


30 posted on 05/04/2009 6:17:41 AM PDT by iacovatx (If you must lie to recruit to your cause, you are fighting for the wrong side.)
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To: SeekAndFind

“saving $210 billion”

Don’t you love govt euphemisms about how obama will “save” money by taking it from us, and “invest” it by (way over) spending it on pork programs?


31 posted on 05/04/2009 6:18:55 AM PDT by silverleaf (We live in interesting times: now the entire IRS works for a tax evader)
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To: Notasoccermom

the stock market is on life support, when the powers-that-be no longer need to have it inflated they will flip the switch

everything is one big ponzi scheme now, a lot of the trading is being done by Goldman Sachs

and a huge proportion of the heaviest traded stocks are the stocks most heavily shorted

good luck


32 posted on 05/04/2009 6:21:36 AM PDT by silverleaf (We live in interesting times: now the entire IRS works for a tax evader)
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To: SampleMan

For every action there is a reaction. All things being equal capital is like water it will take the path of least resistance. This will not work as the government types have planned.


33 posted on 05/04/2009 6:25:15 AM PDT by phormer phrog phlyer
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To: ElayneJ

“The dems should have seen this coming”

It is a tactic of oppressive regimes to threaten the sources of money, including businesses, to motivate those sources to donate and support the regime. This is simply a way to motivate payoffs. You will probably see lobbying efforts that eventually water down or eliminate this threat of taxation. The political contributions to the leftists will go up, however. This is like a political fund drive campaign. This current gov’t wants to create the richest political movement in history. Intimidation and threats are effective fund raising techniques.

This is all typical leftist methodology. If you haven’t seen it before, well, now you are being familiarized with how a corrupt and oppressive regime operates.


34 posted on 05/04/2009 6:29:13 AM PDT by iacovatx (If you must lie to recruit to your cause, you are fighting for the wrong side.)
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To: iacovatx

Well, I haven’t seen it before. This is my first experience in living under an increasingly fascist dictatorship and I’m not liking it very much.
I had a conversation with one of my liberal friends before the election, and this idea came up then. He said companies should be taxed more heavily for doing business off shore, and my argument was that then they would just relocate. This apparently had not occurred to him. And this idea of massive payoffs had not occurred to me. Although it should have, with the recent Chrysler incident.
Interesting.


35 posted on 05/04/2009 6:44:09 AM PDT by ElayneJ
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To: SeekAndFind

Now see what happens to the economy.


36 posted on 05/04/2009 7:04:28 AM PDT by Rappini ("Pro deo et Patria.)
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To: jveritas

“...as part of a broader package aimed at saving $210 billion over 10 years.”

Oh, good. I was worried about that $12 trillion or whatever it is we’re scheduled to spend over the next decade, but if we’re saving $200 billion, everything’s fine.


37 posted on 05/04/2009 7:06:28 AM PDT by Tublecane
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To: SeekAndFind
provisions in the tax code that he says encourage U.S. companies to move jobs overseas,

This is long overdue, and will draw out both Democrat and Republican politicians who personally benefit from selling out US taxpayers.

Taxpayers should not be forced to subsidize and insure multi-national companies that move manufacturing and development overseas, to sell back into the US market, from which they have removed all their manufacturing and development jobs.

38 posted on 05/04/2009 8:32:33 AM PDT by meadsjn
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To: Rappini
Now see what happens to the economy.

The market is up.

The condition and direction of the whole economy is dependent on the financial condition of the US consumers, which is dependent on those consumers having jobs -- jobs that provide disposable income; not subsistence level or less.

39 posted on 05/04/2009 8:41:54 AM PDT by meadsjn
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To: meadsjn

“Taxpayers should not be forced to subsidize and insure multi-national companies that move manufacturing and development overseas, to sell back into the US market, from which they have removed all their manufacturing and development jobs.”

I understand your point of view, but that is not all there is to it. US corporate tax rates are higher than almost all other foreign countries. Today, a US subsidiary in, say, Germany pays German taxes. Then the US parent company will pay US taxes when dividends move from overseas to the US. After this change, the German subsidiary would have to pay both German taxes and US taxes over and above that at the time of its operations. This would mean that the US subsidiary is at a competitive disadvantage to its competition.
For more analysis, see http://www.cato-at-liberty.org/2009/05/04/obama-offshore-tax-plan-will-cost-us-companies-business-and-jobs/


40 posted on 05/04/2009 8:45:51 AM PDT by Stat-boy
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To: Stat-boy
... the US subsidiary is at a competitive disadvantage to its competition.

Good. US companies that have NOT moved operations should be given the competitive advantage, just as the founders intended.

Neither the offshore US subsidiary nor their foreign competition deserve free access to the US consumer market at the expense of US producers, consumers, and taxpayers.

41 posted on 05/04/2009 8:56:24 AM PDT by meadsjn
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To: meadsjn

“Good. US companies that have NOT moved operations should be given the competitive advantage, just as the founders intended.”

In my example, the topic was in a foreign market (say, the German market). The example was not about importing anything into the US.

I also disagree with you about importing—but that’s another topic.


42 posted on 05/04/2009 9:28:38 AM PDT by Stat-boy
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