Le Jacquelope
Loves Spam
- Joined
- Apr 9, 2003
- Posts
- 76,445
and offshore tax havens!
It's the beginning of the end! Capitalism is dying! Oh noes! The Russians are coming! Er... *hic* It's the end of the world as we know it! And I feel fine!!!
http://news.yahoo.com/s/nm/20090504/pl_nm/us_obama_economy_taxes/print
Obama seeks tax changes for U.S. firms overseas
By Caren Bohan and Kim Dixon Caren Bohan And Kim Dixon 1 hr 50 mins ago
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.
The plan also would make it harder for individuals to stash money in overseas accounts to avoid taxation. Obama will roll out his ideas in an announcement at 11:05 a.m. EDT, where he will be joined by Treasury Secretary Timothy Geithner.
U.S. officials said Obama wants to follow through on a campaign promise to change the tax treatment of 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 in the next decade.
In an echo of a line he used often on the campaign trail last year, 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 a letter to congressional leaders in March opposing changes to the "deferral" provision.
The letter, signed by 200 companies and trade groups like the U.S. Chamber of Commerce, 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.
Pfizer, Oracle, Microsoft Corp Johnson & Johnson and General Electric Co were among the firms that signed the letter.
NO MORE DEDUCTING EXPENSES
A central provision would prohibit companies from deducting expenses supporting their overseas operations until they pay taxes on offshore profits.
The officials said the plan would also end a practice by which some firms take big deductions against their taxes by inflating the amount of foreign taxes they have paid.
The proposal also includes extension of a research and experimentation tax credit the administration says businesses have been pushing for, which is expected to give a tax cut of $74.5 billion over 10 years to companies investing at home.
Drew Lyon, a tax expert at PriceWaterhouse Coopers, said the changes to the "deferral" provision would be sweeping, since half of multinationals firms' income is earned abroad.
"It's really hitting most Fortune 100 companies that depend to a great deal on growth of foreign markets for growing their total earnings," Lyon said, adding that many countries are moving in the opposite direction of giving firms new incentives for investing abroad in the hope they will boost exports.
Senior U.S. officials who described Obama's plans said they were balanced and would not put excessive burdens on firms.
They said studies looking at effective tax rates -- the amount paid after deductions -- show the United States is in the middle range of other Group of Seven countries when it comes to corporate taxation.
Obama's proposals on deferral mirror legislation drafted by House Democrats, who the Obama administration consulted in crafting its plan.
In addition to the changes to the deferral provisions, separate proposals in Obama's plan would raise $95 billion by cracking down on overseas tax havens. Such tax havens became a major topic at the April meeting in London of leaders of the Group of 20 major economies.
The Obama plan would close loopholes that allow firms and individuals to hide income. He also plans to bolster enforcement of overseas tax evasion and wants to see stiffer penalties for those who fail to meet reporting requirements.
While serving in the U.S. Senate, Obama backed legislation drafted by Sen. Carl Levin, head of the Senate Permanent Subcommittee on Investigations, to crack down on tax havens. That legislation did not pass but Levin and other lawmakers are working on other ways to address these issues.
In one of the proposals to crack down on tax evasion, the administration would require financial institutions to share information to the Internal Revenue Service about its U.S. customers. Foreign institutions must sign up with the IRS to become "a qualified intermediary" or else face a presumption that they are helping individuals evade taxes.
Swiss banking giant UBS AG acknowledged in February that it helped U.S. clients conceal assets from their government. It agreed to pay a $780 million fine and has since identified about 320 of its American clients.
The U.S. government is now suing UBS in a civil case to reveal the identities of 52,000 Americans suspected of using accounts at the bank to hide about $14.8 billion of assets.
(Editing by Doina Chiacu and Bill Trott)
It's the beginning of the end! Capitalism is dying! Oh noes! The Russians are coming! Er... *hic* It's the end of the world as we know it! And I feel fine!!!
http://news.yahoo.com/s/nm/20090504/pl_nm/us_obama_economy_taxes/print
Obama seeks tax changes for U.S. firms overseas
By Caren Bohan and Kim Dixon Caren Bohan And Kim Dixon 1 hr 50 mins ago
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.
The plan also would make it harder for individuals to stash money in overseas accounts to avoid taxation. Obama will roll out his ideas in an announcement at 11:05 a.m. EDT, where he will be joined by Treasury Secretary Timothy Geithner.
U.S. officials said Obama wants to follow through on a campaign promise to change the tax treatment of 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 in the next decade.
In an echo of a line he used often on the campaign trail last year, 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 a letter to congressional leaders in March opposing changes to the "deferral" provision.
The letter, signed by 200 companies and trade groups like the U.S. Chamber of Commerce, 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.
Pfizer, Oracle, Microsoft Corp Johnson & Johnson and General Electric Co were among the firms that signed the letter.
NO MORE DEDUCTING EXPENSES
A central provision would prohibit companies from deducting expenses supporting their overseas operations until they pay taxes on offshore profits.
The officials said the plan would also end a practice by which some firms take big deductions against their taxes by inflating the amount of foreign taxes they have paid.
The proposal also includes extension of a research and experimentation tax credit the administration says businesses have been pushing for, which is expected to give a tax cut of $74.5 billion over 10 years to companies investing at home.
Drew Lyon, a tax expert at PriceWaterhouse Coopers, said the changes to the "deferral" provision would be sweeping, since half of multinationals firms' income is earned abroad.
"It's really hitting most Fortune 100 companies that depend to a great deal on growth of foreign markets for growing their total earnings," Lyon said, adding that many countries are moving in the opposite direction of giving firms new incentives for investing abroad in the hope they will boost exports.
Senior U.S. officials who described Obama's plans said they were balanced and would not put excessive burdens on firms.
They said studies looking at effective tax rates -- the amount paid after deductions -- show the United States is in the middle range of other Group of Seven countries when it comes to corporate taxation.
Obama's proposals on deferral mirror legislation drafted by House Democrats, who the Obama administration consulted in crafting its plan.
In addition to the changes to the deferral provisions, separate proposals in Obama's plan would raise $95 billion by cracking down on overseas tax havens. Such tax havens became a major topic at the April meeting in London of leaders of the Group of 20 major economies.
The Obama plan would close loopholes that allow firms and individuals to hide income. He also plans to bolster enforcement of overseas tax evasion and wants to see stiffer penalties for those who fail to meet reporting requirements.
While serving in the U.S. Senate, Obama backed legislation drafted by Sen. Carl Levin, head of the Senate Permanent Subcommittee on Investigations, to crack down on tax havens. That legislation did not pass but Levin and other lawmakers are working on other ways to address these issues.
In one of the proposals to crack down on tax evasion, the administration would require financial institutions to share information to the Internal Revenue Service about its U.S. customers. Foreign institutions must sign up with the IRS to become "a qualified intermediary" or else face a presumption that they are helping individuals evade taxes.
Swiss banking giant UBS AG acknowledged in February that it helped U.S. clients conceal assets from their government. It agreed to pay a $780 million fine and has since identified about 320 of its American clients.
The U.S. government is now suing UBS in a civil case to reveal the identities of 52,000 Americans suspected of using accounts at the bank to hide about $14.8 billion of assets.
(Editing by Doina Chiacu and Bill Trott)
