WASHINGTON (CNN) – The White House will unveil reforms to the nation's international tax code on Monday intended to close loopholes for overseas tax havens and end tax incentives for creating jobs overseas.
Senior administration officials briefed reporters Sunday evening in a conference call ahead of the announcement that will be made by President Barack Obama and Treasury Secretary Tim Geithner.
The two components of the president's plan include reforms that ensure the tax code does not handicap companies seeking to create jobs at home, as well as reforms that reduce the amount of tax revenue lost to tax havens.
The White House is targeting companies that use loopholes in the law that allow them to legally avoid paying billions in taxes. It also focuses on wealthy individuals who break the law by creating hidden overseas accounts.
The Obama administration plans to raise $103.1 billion dollars by removing tax advantages for investing overseas and will use that money to help make a tax credit permanent, the officials said. The administration also hopes to raise $95.2 billion dollars over the next 10 years by cracking down on overseas tax havens.
The White House, under the plan, would eliminate the "check-the-box" provision which allows corporations to designate overseas subsidiaries as branches of the company, not subjected to taxes. This tax loophole enables companies to avoid paying U.S. taxes.
One senior administration official said it has cost the U.S. government $86.5 billion over 10 years and is "the most unjustified loophole in the international tax system which needs to close down." It is a legal practice, the officials said, involving "companies taking advantage of a very bad law."
The U.S. government also loses about $9 billion in tax revenue from wealthy individuals who use illegal tax havens overseas, a senior administration official said.
The White House will announce the changes as part of the administration's budget. The plans includes the IRS hiring almost 800 new employees, who would be devoted to cracking down on overseas tax abuse.
The administration expects these initiatives to raise at least $210 billion over the next 10 years "to cut taxes for American families, increase incentives for businesses to create jobs in America, and reduce the deficit."
When asked about the intense lobbying effort already underway against these reforms, including 200 opposition letters sent to Congress, a senior administration official said, "We expect many lobbying against us ... "
Let me paint the picture. Certified project manager with 10 yrs experience in technology development and infrastructure. Our US pay rate $97/hour. Same project manager in India working US hours...$19/hour. Which one would you choose?
There is no way we can compete in this global market (that includes our kids coming out of schools with student loans). And oh by the way...other countries are NOT hiring US resources. So where do we find employment? It is the responsibility of US citizens to create US jobs. Those companies that choose to go out of the state should pay to do so. Otherwise our country will have a hard time funding our own economy!
This issue is one of the many reasons I voted for President Obama. Anyone interesed in what we as citizens have had to pay because of off-shore tax havens should go to US Public Interest Research Group Report on Tax Havens.
Fred was complaining about the jobs that will be lost because of what President Obama plans to do. My question is what happened to all the jobs that were supposed to come with the Bush tax cuts? While Republicans will moan and whine about this and say that President Obama doesn't know what he is doing and that he will ruin the country, WHERE ARE ALL THE JOBS THAT WERE SUPPOSED TO HAPPEN WITH THE BUSH TAX CUTS? Republicans have constantly told the American people that tax cuts to Corporations and the wealthy will produce more jobs and opportunities to everyone else, I think it's called trickle down economics, WHERE DID THE JOBS GO? It seems to me that the only ones who benefited from the Bush tax cuts were the already wealthy and Corporations. Fred, have you looked at the profits made by the Corporations, how about CEO's of companies? Byron, NC why don't you go to one of the Corporations in NC and ask for that handout.
Short-sighted and stupid. This will easily cost more than the revenues it produces in lost jobs.
Yep the GOP Greed Over Principle party will fight this but it's about time something like this was done. We need american jobs Hire in America get a tax break send jobs overseas pay out the nose in taxes.
Finally May 4th, 2009 9:51 am ET
Thank God!!! For all the critics of Obama. He has followed up on every promise of his campaign. The days of the the "suits" creating loop holes for themselves and friends are over. I'm sure the party of no will even criticize this. But I'm not sure how.
Kudos to "O"
This statement just shows how blindly people fallow Obama. lets just look at one claim.
"He has followed up on every promise of his campaign"
What about removing troops from Iraq no matter what the circumstance?Did he keep that one?
Not raising taxes, has he kept that one?
to unite the American people, has he kept that one?
to reform the earmarking process, has he kept that one?
I could go on and on. Like I said, this just goes to show how blindly people fallow Obama.
What's the difference between products made by American companies overseas and products made in China? Nothing except that those "American" products still cost you more than the ones made in China. Oh, and they don't employ American workers to make them. But perhaps you buy into the argument that it doesn't matter where a product is made as long as the profit comes back to the US. What a load of BS.
GOPers aren't going to win new converts on this one. Their argument, accurately paraphrased is as follows: "If corporations have to pay more taxes, like they should've been in the first place, then CEOs and upper-echelon executives and management will cut jobs in order to continue making obscene salaries at the expense of the middle-class!!!"
That argument, "my friends," falls on very VERY deaf ears. We're having none of it. The fact is, corporate law allows consideration of the reasonableness of CEO and principle salaries. It's high time we start defining reasonableness in terms of whether middle-class employee salaries are experiencing reasonable growth similar to the growth CEO and principle salaries have been experiencing. The bilking of the middle-class is slowly but surely coming to an end.
It AMAZES me to hear to the Republicans cry about this.
America First was the biggest lie I ever heard.
And by the way, Joe Smith – AIG got billions from BUSH.
I say make these corporations and global elite pay every dime they owe the USA! All they care about is to put Americans out of work by using offshoring, outsourcing and importing cheap H-1B and H-2B foreigners! They have our congress in their pocket so I'd be surprised this succeeds.
300 million consumers in this country and all the repubs can threaten is that NO ONE will be here to serve that market if they have to actually pay txes in america?,,,,,,let em go the new american entrepeneurs will be happy to step in and fill the void these out of touch/control companies leave
Bush Chenneys era of corrupution and dictatorship, finally coming to an end, what a relief, Obama you are just amazing....keep up Sir....
Sorry, I'm a little confused. Explain to me again how capital sitting in a bank in the Cayman Islands creates jobs? Have a nice day.
"It also focuses on wealthy individuals who break the law by creating hidden overseas accounts."
And the neo-cons quibble over a tax mistake by Geithner!
But expect the Party of NO to start screaming loudly for this to not proceed, since it allows the rich and the Wall Street fat cats to hide the money they "earned" from "trickle down" economics.
Hypocrites once again.
I would like to know what percentage of Republicans complaining about this policy, are wealthy businessmen or women? It always amazes me how the not so wealthy Republicans fight for policies that help big corporations. As if someday they'll actually become the owner of a Fortune 500 company. Republicans complain about 'illegals' and immigrants taking 'their jobs' but don't support the President creating incentives to keep jobs in America. President Obama is doing the right thing by putting the poor and middle-classes first and letting those who can afford it, PAY!!!
Once again, President Obama is fulfilling his campaign promises.
This shows that President Obama if for the average guy and the screaming by the neo-cons that this is a tax hike for the rich!
Not too sympathetic with fat cats and the rich trying to avoid paying legal taxes.
maybe they could afford to pay a regular US worker $8 or 10 per hour if they weren't paying the CEO the equivalant of $20,000 per hour
I am not afraid of these businesses tumbling. they will find a way to operate honestly and with integrity or fail.
While it will have an incremental effect, that is no reason to justify a company relying on cheating us, the US taxpayers to stay in business. Almost none of us in the middle class or small businesses are using offshore dodges to avoid paying taxes. Arguing against closing this loophole is just another example of republican support for subsidizing the wealthy and the large corporations.
Offshore shenanigans like this are not just for hiding taxable income, they are also vehicles to shield other questionable practices, and the current financial crises is proof of where that kind of obfuscation has gotten us.
Can any of you honestly say it is right for businesses to hide assets offshore while taking advantage of the largest economy, the most stable government and financial system on the planet? What ever happened to the much touted republican qualities of integrity, country, family? Do they not apply when it comes to our corporate family?
Good News Mr. President. We have seen for the last 8-10 years companies using these tax loopholes and not creating jobs here in the US. Then sending jobs overseas and putting millions of Americans out of work. Compound that with companies giving these H1B visas to foreign workers and paying them pennies on the dollar. The Rethuglicans call this capatlism and call this putting America first. Make these greedy companies and wealthy people pay their fair share of taxes.
For those of you worried about companies leaving the US for overseas, these companies would have left already IF they could do it without American taxpayers subsidy. Do you think foreign countries take money out of their pockets to assist American companies get started in their country - NO.
Limited assistance to help other countries developing markets so there can be good trade partners is a good thing. However, greedy US corporation have learn how to use TAXPAYERS money to develop foreign business with cheap labor to sell products back into the US market. Then add insult to injury by not paying taxes back into the system that help them.
Atleast the welfare receiptents pay sale taxes
In reading these post so many people are talking about how these corporations will just move their companies over seas. How American is that? Obviously these companies who balk at paying their fair share of taxes could care less about America. Their only concern is the almighty dollar. Oh, and by the way it is the American people rich and poor who purchase products made by these companies that have made them the profits they have made.
I love all you people that condemn those who "don't pay taxes", how righteous of you. You are the same people that don't seem to mind your tax dollars going to rebuild a country we destroyed based on lies. In case you didn't know, poor people, retirees do manage to spend money, the little money they get from the government. And, guess what when they spend that money, they pay taxes too.
Conservatives & Republicans are going to say no.Because they made a pack with the devil.They claim that government is bad and so taxes have to be cut,then government functioning does indeed become bad in many areas because of the lack of funding and then the Republicans use the damage that they caused as evidence that government is no good.The conservatives and republicans favor private enterprise and freedom from government control.This is how Bernie Madoff and wall street and the banks and big company's robbed us and mess the economy up.Thank God for Pres.Obama and his administration for looking out for the little guy.God bless.
Thank you mr president,all the money in the swiss bank all the investment in dubai let them pay there share
Mr. President, Keep it up and bring these corpotations and their CEO in line of every Americans and make sure they pay their share of taxes. take out all loop holes and watch how these GOP react . I am sure you will have enough public support on this as well as the policies you are planning to change, keep them barking behind you as they do not have any of their own plan or any new idias. they are still in their old thinking and support their own interest.
Obama is going to save over $90 Billion over the next ten years by reducing overseas tax havens for the wealthy!!!!
It's about time we have some real solutions, right??
Let's break it down here, folks. That's $9 Billion per year. With an administration that's willing to spend $787 Billion in its first 3 months, I'm not sure were making forward progress here. Seems like we're growing the deficit here... I'm not sure is there a math whiz that can explain this to me?
I'll end it on this. I am the lowest tax bracket, just starting my career. Degree in Finance, about to become a CPA... I'm not an idiot. Obama is showboating and pandering to the little guys (it's not workin for me) by creating class envy, making a show of taxing the wealthy, and putting a stop to their "evil, greedy loopholes". Obama will turn tax avoidance (PERFECTLY legal) into tax evasion(illegal, look-up Tim Geithner for examples).
It won't work. $9 Billion a year versus $787 Billion. We'll need 100 similar programs to pay back what we've spent IN THREE MONTHS!