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 ... "
if the administration wants the publics' blessing on this subject; he might publisize those corporations who now legally use "check the box" waver, then we might assist him in and his adminisrations attempt to recoup these billions ..he'll need to, given the billions he's showered to the likes of AIG,etc..
The GOP will fight this tooth and nail, since their base is created from 'fat' companies and individuals. This is why they will , once again, fail. The American public is getting more liberal as time goes by. that being so the GOP, once so stong in US politics will slowly fade away. It's going to take a lot more than Meghan McCain to over come the GOP greed and stupidity image. Ann Coulter and Sarah Palin's stock in trade is hate mongering and people laugh at these shallow lightweight morons who are the public face of the GOP. for the sake of the USA the sooner the GOP dies the better.
"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."
And yet, Republicans still push the elaborate con of Reaganomics and seek the support of anti-government groups like Club for Growth.
All th while, spouting such nonsense as, "Tax cut lead to increased revenues"
Good!!!! It's about time these people stop taking advantage of the tax code to take jobs and money outside of the country.
I've been saying this should be done for years. Outsourcing has cost Americans more jobs than any illegal immigration problem. And companies avoiding paying taxes through legal loopholes has cost our country billions of dollars in tax revenue. Right on Mr. President.
Thank you Mr. President. It's about time someone in the white house placed the United States well being above corporate interest.
I'm curious as to how taking away the ability to leave overseas revenue in overseas accounts where it is not subject to US taxation will create a business incentive. Rather than resulting in more tax revenue, this seems likely to incite companies to transfer completely to their foreign offices. Why do business as a US company when it's less profitable and harder to compete?
This "crackdown" on overseas finances is very thuggish in nature. It's getting to the point that being under the heavy hand of the federal government's tax machine is a liability in both business and personal life. Is the IRS becoming our version of the Gestapo?
obama, how about a flat tax rate here in the USA regardless of income? close all loop holes and deductions excepting for dependents and mortgage. tax code in the usa needs your attention, if you can do anything about it.
Thank you President Obama.... this is long overdo.
What lobbying group is against this? Honestly. The SCAT. Special Citizens Above Taxes. haha. lol
Thanks President Obama for this move in helping to fix this country.
About time to crack down on the people who call themselves americans and dont pay there fair share.
None of the people Obama has hired pay their taxes anyway. So why do they get to legislate what we pay???
This is a bold move by the Obama Administration. Of course, the corporate world will try and convince us that hiding taxable funds is needed in order to maintain jobs here in the US. They'll tell us that they will have to cut jobs in order to stay afloat. Well let's cut them off before they begin. We're already aware of corporate tax shelters and the wealthy's international tax havens. Are they using those funds to keep business afloat? No. It's power and influence they're seeking and they will put the American people at risk to prove a point. Be careful Mr. President, I'm sure you're aware with whom you're dealing.
A real nice thought but does anyone think that Congrerss is going
to approve such a move? We all know both Dems and Repubs will
be lobbied to "put it on hold" for another time for another election.
It's not "We, the people...."; but rather "We, the stupid people....".
Until the voters think for the well-being of the nation and not only for
themselves, like the Republicans do, then we should not complain
about the status quo.
This is a call to “THE PEOPLE” !
Though well intended and entirely justifiable on the merits, this will never happen if we leave it to the White House and Congress to make this change.
The firestorm of interests that will campaign, coerce and threaten will be unprecedented and unrelenting. The only way our elected official will be able to stand up to the barrage of attacks they will surely endure is if “We the People” stand up in support of the good people in the federal government who are trying to do the right thing.
Way to be ON IT Pres. Obama! Keep those jobs at home! I don't think the wealthy shareholders of these companies that keep shipping job overseas are going to be thrilled but....who gives a flying?!! Let's hope their "friends" in the Senate finally put country first and don't try to block your efforts.
Obama '08, '12 and beyond if possible! SEND/SUBMIT!
get rid of the AMT while you're at it.
In the middle of an ailing economy, this idiot, Obama, is trying to drive businesses out of the country? Or drive them out of business entirely?
It is absolutely unconscionable that with businesses failing at a shocking rate, or having to scale back their operations, in both cases depriving people of their jobs, the administration seems to be determined to squeeze even more blood from an already squeezed-dry stone.
The prevailing attitude of government seems to be one of to hell with the businesses that drive the American economy, and to hell with the people who drive those businesses. Kill them, hurt them, it doesn't matter, so long as essentially parasitic government gets all the money it wants.
The American economic pie is shrinking; the already outrageous proportion of that pie usurped by government is growing. If this keeps, those two circumstances will result in providing the Federal government with 100% of nothing.
It's about time. And further stop the loss of the tax base by sending home a lot of H1B visa holders that have taken our tech jobs here.
It's about time.
Good move! Everyone needs to pay their fair share!!!
It's about time something is done.
Rest assured, big companies who abuse this law will not be happy knowing that they will have to begin paying their fair share of the taxes owed.
I am certain this will bring about boos from our Republican Congressmen.
Our tax code is a million pages of special exceptions, exclusions, and loopholes, paid for with the campaign contributions and bribes of the beneficiaries. Our tax code needs to be completely revamped. A new tax code should adhere to these principles:
1. It should be progressive. Those who receive the most income should pay a larger percentage of their income in taxes.
2. The purpose of the tax code is not to provide "incentives" – with elaborately designed deductions for this or that – but simply to raise revenue for government activities. The incentive to do the right thing comes from our moral code, not our tax code.
3. Reduction in taxes should be paired with a corresponding reduction in specified government services. In other words, if you propose a tax cut, you also propose a spending cut that will make the tax cut affordable.