May 4th, 2009
11:00 AM ET
6 years ago

Obama plans corporate tax crackdown


NEW YORK (CNNMoney.com) – President Obama on Monday spelled out his plans to close corporate tax loopholes on U.S. multinational corporations and crack down on overseas tax havens.

The goal is to help create new jobs in the United States and make the tax code fairer.

But tax policy experts and corporate lobbyists said said the measures, unless accompanied by a reduction in the corporate tax rate, will push more companies to move their operations - and jobs – overseas to more tax friendly countries.

The White House and Treasury Department laid out three proposals that they say will eliminate the current tax advantages U.S.-based multinationals get for investing and creating jobs abroad.

Among them, reforming the "deferral" rule that lets U.S.-based multinationals take deductions on their expenses supporting overseas operations but defer paying income tax on the profits they make from their overseas operations. They only need to pay U.S. income tax on those profits if and when they bring that money back to the United States.

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Filed under: President Obama
soundoff (91 Responses)
  1. kevin

    Hail to a real President and Chief of the people of this country. You go President Obama you have just restored my faith in my President. Now, don't let the Rethuglican try and steal your thunder.

    May 4, 2009 12:39 pm at 12:39 pm |
  2. Dan

    The corporate tax needs eliminated and our entire tax system needs thrown out and replaced with a balance between a flat or fair tax. What is so difficult about everyone paying the SAME percentage. If you make more, you pay more, simple as that. It takes economic growth to pay for anything and a 35% tax rate cuts that potential growth and wage increase by guess what? 35%. What if you got a 10% wage increase while your dollar still held its value? The other 25% would expand operations and increase jobs. Or maybe your company is just happy being the size it is...35% wage increases for everyone! What would such a tax code do for you??

    May 4, 2009 12:41 pm at 12:41 pm |
  3. Ignorance

    Please explain why businesses would move their businesses overseas.

    As an American business man, I understand the huge advantages for having my companies reside on American soil.

    Please enlighten me and maybe I will move my businesses overseas.

    May 4, 2009 12:41 pm at 12:41 pm |
  4. AndrewCPA

    As someone that does work on taxes, what the President is panning to do is to turn the tax codes up-side down, make it stream-lined, and "fair". Well by doing this will he not only make business move out of the US, but also put CPAs and other tax professionals that specialize in this type of work. And for anyone that thinks CPAs are making tons of money we really do not. We are just hard working individuals like anyone else.

    Like everyone is saying, lower the corp tax rate and close certian loop-holes, this will keep everything moving forward, generate revenue for the Fed/State gov'ts, and keep jobs in the USA.

    As for a fair tax on individuals, that would be nice, but again, this would never happen. People depend on deductions to lower their tax burden, take that away and people might give money to chairties and buying house would not make sense.

    This is something that memebers of Congress really need to look at from both sides and work on something that will fix the issues. It should not just a Dem or Rep soultion, but a group.

    And to both sides on this blog, hoping the Presidenat fails, blaming Bush, or telling Republicans to just go away does not doing anything to fix the issues, but to show that you are nor willing to work with anyone with a different view point.

    May 4, 2009 12:43 pm at 12:43 pm |
  5. Rob Johnson

    It's about time.

    Funny how the conservatives that you hear screaming about a modest income tax hike never complain about the vast amounts of money that corporate America hides in offshore accounts or tricky bookkeeping maneuvers.

    Since they apparently haven't figured this out, here's a tip for the "No New Taxes" crowd. Just get the largest and wealthiest companies in America to pay their fair share, and we wouldn't need to tax individual income at such a high rate.

    May 4, 2009 12:46 pm at 12:46 pm |
  6. trying to be reasonable in WV

    Most corporations will survive the closing of the loopholes without leaving the country entirely. Maybe a phase-in period would give them an opportunity to adjust, but in any event some "corrective" measure is probably overdue.

    Whenever it comes to tax policy, one hears a lot of arguments about tax rates, even some advocacy for flat tax rates, as in "why not have the same tax rate for everybody?" We decided almost (more than?) a century ago that progressive taxation (the wealthy pay proportionately more than the less wealthy) was a good idea. Now there are those trying to persuade us that this is unfair. I say NO, it is not unfair. As long as taxation rates are rational and aren't truly confiscatory, progressive taxation seems quite fair indeed, as those who benefit most from the structure of our society have a greater responsibility to provide for its functioning. It IS true that repressive taxation is a disincentive toward wealth-building, but when the richer get richer at the expense of the poor, that argue rings hollow. How about determining tax rates by first asking the question, how much money do you have LEFT after taxes? Nobody wants that amount to be too little (although that is true of millions of Americans), but there is absolutely no admission on the part of some that there could ever be TOO MUCH left. Remember that under that radical commie scumbag Eisenhower (a Republican!), the top tax rate was 90%. People still got wealthy then. While I think that's considerably too high, a return to pre-Reagan rates is not unfair.

    May 4, 2009 12:46 pm at 12:46 pm |
  7. Chris

    This may be great news! Now, if he will only apply this 'crackdown' against all of those deadbeats who grew up on welfare, are now living on welfare, and are teaching their little ones how to get the 'free' ride we could save many billions more. This money could then be applied to a 'one-time only' aid to actually train these dependent people in some type of work and let them know that the working class never planned on carrying them forever! Go obama, stop waste at all levels.

    May 4, 2009 12:46 pm at 12:46 pm |
  8. Sniffit

    Fact: Allowing companies to avoid paying taxes via maladaptive loopholes is EXACTLY THE SAME AS HANDING THEM BAILOUT MONEY WITH NO STRINGS ATTACHED. It all ends up in the CEO's/executives' pockets.

    Enough with the hypocrisy GOPers. It's really getting tiresome. If you're argument was that the money saved via these tax loopholes ends up in peoples' salaries, etc., that would be one thing, but trickle-down economics is a lie. Average middle-class salaries have not changed in 30 years. People are not employed because tax loopholes exist...they are employed because it helps line the pockets of the up-and-ups. If your argument is that jobs will be lost to shore up CEO/executives salaries and benefits, then I think you really REALLY have some serious thinking to do about whether your "free market" ideology and idealism are (a) true and (b) right for society.

    May 4, 2009 12:48 pm at 12:48 pm |
  9. matt

    Do all of the liberals reading this actually believe that by penalizing corporations with more taxes, that will actually be an incentive for corporations to stay in the US? What will end up happening is those businesses will close up in the US entirely, and move overseas, or to Mexico. Then you can kiss all of the jobs goodbye.

    "It's not fair that corporations don't pay their fair share of tax". And it's also not fair that in a free market society, you have the government penalizing companies with higher taxes, when it is the government creating the hostile business environment and forcing companies to send jobs overseas.

    May 4, 2009 12:48 pm at 12:48 pm |
  10. Super MOD

    For all of you Dems who want to criticize anything and everything, the "check-the-box" rules regarding LLC companies was enacted in 1997 under Bill Clinton. Secondly, under the Bush tax cuts, the largest beneficiary was the bottom tax rate which went from 15% to 10%.

    May 4, 2009 12:49 pm at 12:49 pm |
  11. Sick of Dirty Obama

    The U.S. is the ONLY country that tires to tax foreign corporate income as described above.

    It is a 'loophole' only if you think that the U.S has the right to tax income from business located overseas, the product/service is made overseas, the product/service is sold overseas, and the profit is retained overseas.

    Basically,Obama wants to increase taxes on business activity that HAS NOTHING TO DO WITH THE U.S., and again, the U.S. is the ONLY large country to do so.

    What will be the effect? Obvious, more companies will simply move out of the U.S. entirely. This is a VERY POOR decision.

    May 4, 2009 12:49 pm at 12:49 pm |
  12. Reggie from LA

    Why do folks think it's ALL ABOUT WHAT OBAMA WANTS? Anyone with a lick of since and has been watching realizes that offshoring is used to increase profit margins thru cheaper labor forces. Then the pricing of product increases profit tremendously due to reduced operational cost savings. And then when the expatriots make all that money off of you and me, they get to keep it ALL or most. They maintain citizenship, dual or otherwise, why shouldn't they pay taxes. And as for Robin Hood references there Sheriff's of Nottingham, it is apparent that corporations own you and they don't even know who you are and don't want to know you. I'd rather dance to the flute of Robin Hood that Robber Baron.

    May 4, 2009 12:51 pm at 12:51 pm |
  13. winoman

    Finally, we have a President who is looking out for the greater majority of the American people. Yes, close those corporate loopholes and get jobs home. And make US Corps pay their FAIR share!!! I am so tired of hearing that if we don't give corporations some tax break they will go out of business and then they shut down and move offshore anyway. Why don't we give our corporations everything they want and just get down on our hands and knees and beg them to hire us back.
    I would rather pay our workers a decent wage and have them doing gainful work than existing on welfare. Lack of employment causes social deterioration, ie alcoholism, domestic violence, and malnutrition. I guess that doesn't bother many of our Republican and Republican-leaning friends especially the Conservative Christians who don't see themselves as their "brothers keeper"!!!

    May 4, 2009 12:52 pm at 12:52 pm |
  14. Lynn

    Elections have consequences. President Obama repeatedly stated he was going to do this and once again he delivers. It will also out the politicians in Washington who are in the pockets of big business.

    More of the republican fearmongering to come!! There goal is to reduce the wages of union workers who actually pay their taxes and reward big businesses who pay next to nothing. Reducing corporate taxes could work if they actually paid any.

    I thought all you republicans and haters squealed that it was small business who produced most of the jobs. You people contradict yourself constantly!!

    May 4, 2009 12:53 pm at 12:53 pm |
  15. jared

    all those in congress who opposes this bill should be outed and put on BLAST. because its people seated in congress right now w/ a whole lot of that "backdoor money" made off of shady deals in off shore bank acc'ts . places where they hide the [that a boy] money will be revealed , and if i was one of these crooks and K STREET hustlers from both parties i would be shaking in my boots. who ever comes out against this legistration are the theieves on the hill. now lets hear you scream repubs and democrats.

    May 4, 2009 12:55 pm at 12:55 pm |
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