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 ... "
This piece reflects a lack of knowlege about the subject. Ms. Malveaux needs to spend a little time learning the basics of U.S. taxation of international transactions, and check-the-box regulations in particular, if she plans to report on them.
Calling this a "loophole" is demagoguery on the part of the administration. I voted for President Obama and support him in most matters, but to this point, his tax proposals make little sense. If this bill passes, foreign companies will hold an even greater competitive advantage over U.S. companies in the international marketplace.
About time. Lets publish a list of all those supposedly American companies that wave the flag while paying their employees overseas pennies a day and could care less about benefits.
I am glad cause I am tired of calling my credit card company and my cell phone company and getting a middle eastern guy who says his name is Bob or Rick and I can't understand a word he is saying. American are struggling with Jobs lost and I am trying to get my phone fixed by somebody who cannot speak good english come on people. That is frustrating
It's about time!!
please END the shipping of american jobs overseas – to india and china – that GW Bush started NOW!
Good! It's about time. I can't wait to see what reason the republicans have against this. Have a nice day!
About time for an Administration that is not for the Corporate, run by the Corporate and is the Corporate...
Please don't listen to the lobbyists on this one Obama, reward the companies that create jobs in the USA and punish the ones only looking out for the bottom line without any concern for American workers.
Exactly what we elected President Obama to do. Bravo!!
Once again anything to hurt business by ivory tower "thinkers" trying to hamstring the actual economic "doers." But that's what you get when you elect someone who never had a job.
FINALLY!!! YES please!!!
I have been laid off 4 times on 4 years (!!!!!!) due to outsourced positions being cheaper. I even had to go and train the person taking over my job. (I now work for a company that does not believe in outsourcing,)
The quality standard went straight downhill.
Meanwhile my ex-CEOs made millions!
A friend of mine decided to go out of country to oversee the vendors, she gets thousands in additional money because it still pays off for the company, but she had to sacrifice her family life completely.
There is nothing good in outsourcing.
The lobbying comes from people that fill their pockets on the expense of the workers.
Mr. Pres, Thank you! I work for my USA money!
Good luck on getting that done. There has been much in the way of lobbing to get the tax code set up the way it is. It will take years to start to get it cleaner, smaller and easier to understand. I hope that does happen though.
Oooh! The Republicans are going to hate closing tax loopholes that allow companies to cheat America out of billions in revenue. But that's just typical of them and their long list of failed policies.
Heard a report this morning that, although some politicians demand a reduction in the 35% corporate tax on income over $18.3 million, almost none of them actually pay more than 2-3% due to loopholes and hidden profits.
Ireland has the lowest corporate rate (12.5%). So perhaps the U.S. should lower the corporate rate to 12.5% and cut out all of the deductions and loopholes.
How is it patriotic to hide your income offshore? People seem to forget that the services we expect require revenue. We can pay taxes or we can borrow now and pay taxes later. Already, I've heard people whining because some programs are being cut or eliminated. Too bad, nothing is free and the bills for the last 8 years of borrowing are DUE.
This bill will never pass the Senate and may not even make it out of the House as the wealthy contributors to the Dems will lobby strongly against it. Let's see if Dodd, Pelosi, Reid, Kerry, Lieberman, Frank and others have the ethics to vote this thing through. My bet is that the spin doctors will find a way to soften this or let it die in committee giving Obama a big no vote against his plan for socialism in this country. And for those that say the GOp will block it - wake up, the Dems have the fillibuster proof majority in both the House and the Senate and if it does not pass, or fails to come up for a vote, the blame lies squarely with the Dems. If you voted change, and this bill dies, than the change we need is TERM LIMITS IN CONBRESS
We may not be sure if or not the GOP will raise hue and cry about this international tax policy of BHO. The feeling is they will. most likely, oppose to make their presence felt with, probably, a bang.
It's about time!
Answer: H.R. 25
The current tax code is weighing in at about 54,000 pages. (Over 2.8 million words). It isn't effective. It has only proven a tool for politicians to manipulate the confiscation of our money. They pick the winners and losers.
There is a reason overseas accounts exist. Simplify the code and lessen the penalty for success and you could see the 12 trillion in overseas accounts come back on shore. That would dwarf the most recent "stimulus" package and not have the impact on the economy or federal budget.
It is about time that a President stood up to the rich who do not want to pay taxes! I am sure that the Republicans will throw a fit about this, as the rich and powerful have brought thier votes.
Will the President stop Bloomberg and the MTA from increasing fares ??
What happened to all that pork !!!
What is the difference between a "loophole" and an "incentive?" If we are truly so eager to crack down on corporate excess and unfair taxation, why the $750,000,000,000 corporate cash give away?
More Americans out of work..., gee thanks Obama.
About time; let's see how the Republicans – who were fighting against spending and everything else under the sun – try to protect these loopholes.
Good idea if actually this is followed through with – which is unlikely as Congress will protect their buddies. Obama has talked alot knowing his blabbing won't happen as that is what makes the mainstream media and "makes people feel good".
It's a game he plays called "symbolism over substance".