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 ... "
Dems have been talking about this for years, but until now, have not had the guts to do it. Time to pay the taxes.
Just to be clear, and in case the thought hadn't occured to you. With Obama being President and the Democrats winning ev erything anyway. Here's a thought that should terrify the GOP.................
The floodgates are open and you Republicans can get ready for either a Chinese President or perhaps a native American. wouldn't that be great. maybe a Cuban, who knows?
Here in Canada it would be wonderful to have a member of the Cree or perhaps MicMac indian tribes as prime minister. how about an Eskimo.
Australia could get an aboriginal and the UK could get an Irishman.or a Pakistani.
The floodgates are open Republicans better move to Alabama or Texas, the last red neck states.
David wrote: 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.
So if I'm making 250k/yr say there's a 20% tax for everybody. I'll take home 200k. More than enough to live on. If, however, I'm making 25k/yr, I take home 20k. Fair? Have a nice day.
Henry, the companies that are taking advantage of these loopholes can afford to pay their fair share. Paying a couple billion in taxes they owe isn't going to drive them out of business by any means. My question to you is, you complain about us trying to get all the taxes they owe to the government but then you complain about people like Tom Daschle and a minor tax problem. The Republican Party is dying fast!
Good. It is about time. I can hear the Republicans crying " it will cost jobs to the US." What it will do is take away money from the Republicans/executives bonuses.
Just posted a comment on this subject & already heard on the news that companies are saying that this will create job loss in the USA!
Obviously those companies that have been getting away with these practices are already worried they will loose money! As for the fact that they might move their entire business overseas, well, how about just imposing higher import fees on them?
This will cause Bush Sr and Bush Jr along with Cheney to go into shock...They have been stuffng money overseas for years...To avoid taxs.
You can bet the farm on the "PARTY OF NO" will fight this to the bitter end.
Thank YOU President Obama!!!
This is loooong overdue! For too long we have actually encouraged offshoring American jobs and letting the super-rich hord all the money... enough is enough!
...and please pay no mind to the 21%ers (Republicans) who will tell you this will not help us and only hurt us... What do they know? They have lost ALL credibility on this subject and just about all others! This is such a great move... never thought a politician would have the fortitude to do this! I'm standing and clapping for you Mr. President! Go get 'em!
Discouraging outsourcing helps 98% of all Americans... and as far as the greedy super-rich who think they can play under a different set of rules – well LOVE IT OR LEAVE IT! Time you play by the same set of tax rules and the rest of us...
Had It wrote: 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.
Right on! As a tech worker, I see this every day. My wages are the same as they were 8 years ago. Thanks, bean counters. Glad your bottom line is so healthy. Have a nice day!
Every action has an equal and opposite reaction – can't use oversees sister companies to get out from under the heavy tax burden here – well the sister here in the USA isn't worth keeping so everything goes overseas and we import even more – be careful Mr. Obama – sounds good but it might just blow up in your face.
Not smart. I thought this guy was trying to help.....
Sounds like another way to screw over those who make money and pay taxes in order to give to the 50% who don't pay any taxes, don't create jobs and live off of the George Soros controlled largesse of the Obamanation that we have become.
No more hiding the loot in the Cayman Islands! Time for you rich boys to pay your taxes just like everybody else!
This is gonna be a big fight, and we should help get the legislation passed. I'll hold everyone who voted against accountable in the future elections.
It's way past time to crack down on the corporate tax cheats.
President Obama is truly an amazing President, and he has my full support on reforming the international tax code. I am hoping the majority of americans will support him on this issue. Those of you crying that Congress and the Senate will not back President Obama on this issue are more than likely right, but we as individuals can back him...come on people start flooding your Congressmen/women and Senators with letters and email....remember...YES WE CAN!
@Henry Miller, Fred NJ, and Dwight,
What good is it to average Americans for an American Company to offshore its profits and jobs?
If a company does that, than can we say it is not American anymore?
I do not buy Levi Jeans anymore because they are made in Guatamala. They are no different than the Chinese jeans.
Haliburton not only offshored their profits they've already put their headquarters in Dubai.
It is about time we stop worshiping Business and give them everything as if they are gods who must be placated!!
The people make the rules of the game. Business should try to make a profit within that framework. If they can not then they go under. If you want to do business with Americans, than you have to pay your taxes.
This is how it was for the 45 years before Reaganomics. It is about time we bring that back.
Thank you Mr. President for putting America and Americans over the Big Corporations.
Waiting for ridiculous neocon mumbo – jumbo to now begin........
And where do you young college grads think you will get your jobs when you finish your govt paid for scholarships? Soon, these overseas companies will stop trading with the "exclusive" US and your govt checks will be whittled down to nothing due to lack of funds. Have a good life with your welfare check. I am assuming the Obama backing here comes from the young and naive (no matter how smart you think you are).
Good or bad, we have to see! If the big companies move out of USA, you will know what will happen. Obama would face the lost of money and human resource.
I smell slooow growth. Seems as though big brother will be will do anything to kill the job market...
All you folks who think this is a good idea need to read Dwight and Henry Miller's comments and learn to think for yourselves. Oh, I forgot, you want the government to do that for you, also.
Foreign direct investment creates strong allies with other countries, opens new markets for exports and allows us to create goods cheaper than can be done in the US. The drawback: unions hate it. Obama is in the pocket of big labor and will bow to their every demand. If you like what's happened to our auto industry, you'll love where our country is headed under Obama.
Great news! I couldn't believe what the last company I worked for was doing with its international operations and funelling all those profits to a bank in Bermuda. There was a high priced team of consultants from Price Waterhouse Coopers showing our financial group how to restructure to avoid US taxes. The critical part of it was that the product could not be made in the US, and no US employees could work in the international business. So the company laid off all the US employees that supported the international operations. Those jobs went to China and Ireland. The US tax code encouraged this!
I plan to write my representatives to vote in favor of this change to rhe tax code.
For those who invest in the stock market and have retirement plans, good luck watching them tank and the little money you do make getting taxed at an even higher rate.
Long over due. Maybe so of those jobs will come back to the state.
Henry Miller, Cary, NC May 4th, 2009 7:59 am ET
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
Rush...you should use your real name and not an alias when making comments on this sight!