Obama Takes Aim at Offshore Tax Havens
By JEFF ZELENY
Updated
President Obama will present a set of proposals on Monday aimed at changing international tax policy, calling for the elimination of benefits for companies and wealthy individuals that harbor their cash in offshore accounts.
The president and Treasury Secretary Timothy F. Geithner will announce their plans during a late-morning appearance at the White House. The proposed overhaul in the tax code, which will be fully unveiled in the administration’s budget later this week, could help raise $210 billion in revenues over the next 10 years.
One of the key proposed changes would restrict companies from deferring the payment of taxes on profits earned overseas. Administration officials said the plan also would keep firms from taking deductions against their taxes by inflating the amount of foreign taxes they paid.
Mr. Obama raised the idea frequently during his presidential campaign. In a speech to Congress in February, as he outlined his priorities for the year, he pledged to make the tax code more equitable by “finally ending the tax breaks for corporations that ship our jobs overseas.”
The White House said that Mr. Obama would seek to crack down on overseas tax havens in an attempt to “close the international tax gap.” The president is aiming to take away the competitive advantage for companies that invest and create jobs overseas, working to replace their tax advantages with incentives to produce jobs in the U.S.
Several large businesses have opposed the proposal, telling Congressional leaders in March that the provisions would make U.S. companies less competitive. About 200 companies and trade associations, including Microsoft Corp., General Electric Co. and the U.S. Chamber of Commerce, signed a letter stating that the proposed changes to the tax code would put them at a disadvantage with their rivals.
While Democrats have a strong majority in the House and Senate, the administration’s proposals are still expected to face considerable opposition.
In his presidential campaign last year, Mr. Obama often criticized provisions in the tax code that allowed American firms with overseas operations to defer paying taxes on corporate profits, providing that they placed the money back into their foreign subsidiaries.
In his speech on Monday, the president will call for an end to that practice, as well as seeking to close the loopholes that allow companies and individuals to legally avoid paying billions in taxes through hidden accounts.
The White House said that Mr. Obama also will call for a crackdown on the abuse of tax havens by wealthy individuals. Officials said the president will propose making it more difficult for financial institutions and wealthy Americans to evade their taxes.
The speech is scheduled for 11:05 a.m. in the Grand Foyer of the White House.
LINK
