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 ... "
Way to obama! Just what business needs, new tax levies to discourage growth. So this is how we create/save 3.5 million jobs? This guy is a clown who is in way over his head.
Well that all sounds good and all, but I need some money. As in, cash in my hand pronto.
I'm glad to hear this news. My personal thoughts on this matter are simple, if you made the money, pay the taxes. for those who deliberately sought to avoid paying their taxes, hit them hard.
Let the games begin! There are more of us than the Lobbyists that will have letters on Congress' desks. Read our lips: NO MORE TAX BREAKS FOR THE RICH OR OVERSEAS COMPANIES!!
Thi should teach stop employers from shipping jobs overseas.
With all the fist-banging the Republicans have done about jobs going overseas, why didn't they do this 9 years ago? Could it be because it would hurt the CEOs who are all the Reps care about???
Tax Tax Tax Spend Spend Spend.
I hope its not too late to catch Rush Limbaugh.He claims to be a good citizen that pays his taxes but I think he hides his millions overseas.Thats just my opinion because I dont believe a thing he says.
About time. I hope this is structured so as to make it more profitable to play by the rules here in the US than to go oversees or get caught avoiding taxes. I also hope the Dems can get behind Obama on this one and not let the lobbying get in the way. Here's hoping.
Why do companies want to have jobs overseas? Because it's cheaper, that's why. Why pay high US Taxes if you don't have to?
Interesting plan by Obama – long on how he's going to close tax loopholes and short on how he would insentivize companies create jobs here.
The problem lies with people like Obama and lefty Democrats who are tax and spend artists. Why create jobs here when the government only penalizes you?
Good luck,the rich have had it their way for a long long time....
And there is goes, headlong into ensuring that US corporations become uncompetitive on a global basis. Within a year, imports will be rising, unemployment will be in double digits and inflation creeping up.
Thanks Barack, you've made us the Thirld World in record time.
Well, it about time! Perhaps the community of hopefuls can add their letters of support to couter the 200 in opposition to this plan.
It really could boil down to an issue of Patriotism....do you support the viability of America or do you throw your dollars to the wind?
"When asked about the intense lobbying effort already underway against these reforms..."
Did you expect the rich to just say okay we'll pay our taxes fairly? You don't get to be that rich by not knowing how to take advantage of the system.
It's about time. I don't see how anyone can oppose this. For too many years, people like Dick Cheney have shown their "true" patriotism by getting out of paying billions in taxes while those of us who work hard down in the trenches and those who give their entire life to their trade have footed the bill. I see this as a win-win for America.
The only people lobbying against this will be companies who send jobs overseas and who cheat America!!!!
The GOP talks big about fiscal responsibility, but when it comes to enforcing it they show their true colors: they support the tax cheats and tax evaders!
Watch the republicans defend this practice
Go Obama! Go!
We need to do this. This is pending for a long time.
'Bout dam time!!!!!!!!!!!!!!!!!!!!!!!!
So, he'll make it cost more to do business in the U.S. Why would corporations want to stay? They could move to Singapore, enjoy much lower taxes and just have their "branches" in the U.S. instead.
It's the same on an individual basis. Say Obama took away the mortgage interest deduction, thus making it cost more to own a home...why wouldn't everyone just start renting?
He makes it sound good "look at all the new revenue that we'll get" but fails to measure how much that "real" revenue will decline in the face of having to pay it.
I agree with something obama is doing for once.
although the only jobs he's created so far are government jobs supported by taxes. Oh well, just another group of words read off a teleprompter.
Real question, anyone know the answer:
Would this hurt individual investors who invest in "international" companies via stocks, IRAs, 401(k), etc.?
I hope this passes thru congress at lightning speed.
Finally a President that is working for the "best interest" of the American people and working poor. This should deter all corporations who only want profits and the hell with workers!
This will be a good move for our country.