Obama Takes Aim at Offshore Tax Havens
The president promised during the campaign to crack down on overseas accounts
President Barack Obama has cracked down on credit card companies and hedge fund managers, and now he's taking aim at another unpopular corporate practice: offshore tax havens.
Tightening up on overseas accounts is a goal that Obama promised during his presidential campaign and one he reiterated in his speech to Congress in February. With the pressure now on for him not only to make good on his campaign pledges but also to create jobs at home and bring new revenue into a government that's projected to run a deficit of $1.8 trillion by the end of fiscal year 2009, he has decided it's time to rewrite what he calls a "broken tax system."
Obama's plans, which he and Treasury Secretary Timothy Geithner fleshed out in remarks today, will net the government $210 billion in otherwise lost tax revenue over the next decade, the administration says. In 2004, the most recent year for which data are available, U.S. multinational companies made $700 billion in profit—but paid an effective tax rate of only 2.3 percent.
To try to level the playing field, the administration plans to undo many of the tax advantages that corporations reap for investing overseas. Right now, for example, businesses with overseas investments can take immediate tax deductions for the expenses that support their overseas activities—but still defer paying taxes on those profits. Obama plans to eliminate that ability. He'll also close the loophole that currently allows corporations to claim a U.S. tax credit for foreign taxes that they pay on their profits overseas. And he'll undo the "check the box" rules, by which companies can legally shift income to tax havens to make their foreign subsidiaries "disappear" to the IRS. "These are common-sense changes designed to restore balance to our tax code," Geithner said.
An increase in tax transparency is also on Obama's agenda. Currently, wealthy Americans can invest offshore knowing that there's little chance that their holdings will be reported to the IRS. To ensure that all citizens are being taxed fairly, Obama is proposing to require foreign firms that deal with the United States to pledge to share the same amount of information about their American customers that U.S. institutions do.
A big fight against the proposals is expected from corporations because 83 of the largest 100 companies in the United States use overseas tax havens. Some critics argue that the rules will make companies less internationally competitive. The president is not convinced. "One of the strengths of our economy is the global reach of our businesses," Obama said. "But the way to make sure that happens is not to reward our company for moving jobs off our shores or transfer profits to overseas tax havens."
- Read more about the White House crackdown on credit card companies.
- Read more about the economy.
Reader Comments
The Fine Print
In the past 20 years we have had more of our constitutional rights stripped for the cause of justice and freedom, then any laws actually beneficial to the people over the last 100 years.I can remember the last law passed, that we actually needed. 800 more IRS agents? Is that a joke? That is like saying we are going to hire more cops for the war on drugs and then all the cops do is ride around giving tickets and arresting non violent offenders. For all we know the new IRS agents wont even be working to enforce this new law, just like the clean air act. This administration is proving to be just as big a joke as the last one. This is the western back ass way of thinking. band-aid the problem instead of cure the cause. Lets look at it like this. The Bilderberg group international affiliates will have free reign on American economy once the large American conglomerates are out of the picture. This is just an other way of the protecting the big banking cartel and their invested interest. So far Obama has done nothing for the people and only protected the interest that invested in his campaign. What can we do about these lying politicians? It is a nonstop arsenal of constant attack on the rights of the American Citizen. If The government needs more money then they need to do away with the central banking system and print interest free money. Then take the Federal Income taxes that are all ready being paid to pay off the interest on monies loaned by the federal reserve. Or, we could audit the defense department and find out where that 1.5 trillion in spending is actually going. Either way I don't think any bold action will be coming from politicians anytime soon. Specially since what happen the the last president who was actually going to help the people.(JFK)
Tax Havens
I do tend to feel that taxes paid overseas should be taken into account here; otherwise it's about time we treated everybody equally and we all gratefully pay our taxes honestly. That would fix many problems........and soothe the masses.
Tax havens
The first Ishraq (Splendour)
When the Daystar of Wisdom rose above the horizon of God's Holy Dispensation it voiced this all-glorious utterance: They that are possessed of wealth and invested with authority and power must show the profoundest regard for religion. In truth, religion is a radiant light and an impregnable stronghold for the protection and welfare of the peoples of the world, for the fear of God impelleth man to hold fast to that which is good, and shun all evil. Should the lamp of religion be obscured, chaos and confusion will ensue, and the lights of fairness and justice, of tranquillity and peace cease to shine. Unto this will bear witness every man of true understanding.
advertisement
