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Lewis writes: "Barack Obama will propose a major clampdown on US corporations with a one-off levy on an estimated $2tn of untaxed earnings being stashed overseas, using the windfall to rescue America's crumbling road infrastructure."

President Barack Obama. (photo: Kevin Dietsch/UPI/Landov)
President Barack Obama. (photo: Kevin Dietsch/UPI/Landov)


Obama to Propose Tax on Corporate Earnings Held Overseas

By Paul Lewis, The Guardian

02 February 15

 

White House to unveil budget on Monday and predicts one-off 14% tax on corporations will raise $238bn to inject into project to upgrade roads and bridges

arack Obama will propose a major clampdown on US corporations with a one-off levy on an estimated $2tn of untaxed earnings being stashed overseas, using the windfall to rescue America’s crumbling road infrastructure.

The centrepiece of the White House budget, which will be unveiled on Monday but was shared in advance with the Guardian and other media, is a one-off 14% tax on untaxed foreign earnings multinational companies are shielding overseas.

That is less than half of the current 35% top tax rate for corporations. But the White House predicts the 14% tax will raise $238bn, a sum it wants to immediately inject into a nationwide project to upgrade roads, bridges and public transport.

“These investments would be paid for by closing tax loopholes as part of reforming the business tax rules to level the playing field and make sure everyone pays their fair share,” a White House official said, speaking on the condition of anonymity.

Major corporations such as Apple, Google and Microsoft have been avoiding the 35% corporation tax on earnings repatriated to America by stockpiling earnings overseas in low-tax jurisdictions such as Bermuda and Ireland.

The White House’s proposed one-off tax on companies with earnings overseas would be a “mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated”, the official said. In total, the White House plans to invest $478bn in road infrastructure over six years through the Highway Trust Fund, around half of which would be paid for from the one-off tax.

Republicans have signalled they are open to finding a way to tax earnings stored overseas by big corporations, and have explored similar ideas. They are also in favour of boosting money for road-building – one of the few areas of government spending they are willing to see increase.

In addition to the one-off levy to pay for infrastructure improvements, Obama will also call for a 19% corporation tax on all future earnings, the White House official said.

“After this initial payment, foreign earnings could be reinvested in the US without additional tax, which would level the playing field, and encourage firms to create jobs here at home,” the official said.

“The president’s proposal also includes other loophole closers that crack down on corporations that shift profits to tax havens to avoid paying their fair share or take advantage of so-called ‘inversions’ to avoid paying US taxes.”

The proposals will be contained in the president’s $4tn budget, to be unveiled at the Department of Homeland Security on Monday. The budget is effectively his administration’s wish list.

Much of Obama’s budget plan is likely to be shot down by Republican leaders, who now control both chambers of Congress and will call the shots on future legislation.

But the budget represents an opportunity for Obama, who wields a presidential veto, to draw lines in the sand ahead of tax-and-spend negotiations.

Following his populist State of the Union address last month, which was characterised by his opponents as a Robin Hood-style attack on wealth inequality, Obama is expected to offer an array of spending programmes and tax increases in his budget, to bring “middle-class economics into the 21st Century”.

While open to changes to overseas taxes for businesses, Obama’s Republican adversaries, who have the power to call the shots on fiscal legislation, are fiercely opposed to other aspects of the White House’s budget they believe would harm business or redistribute wealth.

Republican representative Paul Ryan, the new chairman of the tax-writing ways and means committee, said on Sunday his party was willing “to work with this administration to see if we can find common ground on certain aspects of tax reform”.

However, he dismissed Obama’s plan to shut a tax loophole that allows wealthy Americans to avoid paying high rates of inheritance tax by re-organising their estates through trust funds.

“What I think the president is trying to do here is to, again, exploit envy economics,” the Wisconsin congressman told NBC.

“This top-down redistribution doesn’t work,” he said. “It may make for good politics. It doesn’t make for good economic growth.”

Monday’s budget will be aimed at alleviating the tax burden on the middle classes, mostly through tax credits, while raising taxes on the very rich. The White House anticipates strong Republican opposition to some plans, such as an increase in the capital gains rate on couples making more than $500,000 per year, but expects it will be more difficult for the GOP to object to more equitable taxes on American companies storing their profits overseas.

However, there appears to be more room for discussion over the president’s one-off corporate “transition tax” on accumulated foreign profits.

The White House said it opposes “tax holidays” – proposed by senators such as Republican presidential hopeful Rand Paul – that would allow companiesto voluntarily pay a one-time tax on foreign earnings that are returned to the US at a rate as low as 6.5%.


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+17 # MEBrowning 2015-02-02 10:10
"This top-down redistribution [of corporate taxes] doesn't work," says Paul Ryan.

Isn't that precisely the "trickle-down economics" that Reagan and congressional Republicans tried to shove down our throats in the 1980s and 2000s? Ryan appears to be contradicting his own party.

Taxing overseas businesses is an idea whose time has more than come. But asking corporations to tax themselves voluntarily, as Rand Paul suggests, is naive and delusional in his Ayn Rand-inspired "free-market" society.
 
 
+5 # REDPILLED 2015-02-02 10:35
These budget proposals, too little and too late, are DOA in the Republican Congress, and Obama knows it.

So this budget is a pose to set up the 2016 elections, as though the Dems are the party of "the common people", while only the Repubs are the party of the 1%.

But even a cursory glance at economic policies in the U.S. since Reagan would belie that myth, as BOTH parties have served Wall Street and corporations very, very well since then.

As one example, while it's no surprise that John McCain got $2.7 million in campaign contributions from the oil & gas industry in the 2008 presidential campaign, Obama, the supposed "environmental president" got close to one million dollars in that same campaign. (https://www.opensecrets.org/industries/recips.php?ind=E01&cycle=2008&recipdetail=A&mem=Y&sortorder=U)

For the 2012 campaign, while Mitt Romney got $5.8 million from oil & gas, Obama still got $828 million from that polluting fossil fuel industry.

We don't have a democracy. We have an auction.
 
 
+7 # jon 2015-02-02 12:20
And until we get money out of elections, it will only get worse.
 
 
+1 # politicfix 2015-02-02 19:48
@Redpilled - I have to agree with you. Too little too late. Now he can say that he proposed it, and the Radcons wouldn't pass it. Once again...he's the victim. Why didn't he do this when the Dems had the majority in the senate and had more seats in the House? My question is...Are there any oil & gas corporations that want environmental changes but they'll continue as is until change seems inevitable? Is that why they would give Obama money? We should know the answers to these questions. T Boone Pickins (an oil man) had interest in wind energy a few years back, but he was also the man who tried to destroy Kerry. It seems pretty convoluted to me. The more people who search for the truth, and ban together, the more difficult it will be for candidates and corporations. I think Obama needs to answer why he took over 800 million from the oil and gas industry, and why they would support Obama when they're against solar energy and could care less about the environment etc.? Do we honestly know what any of these candidates REALLY stand for when they all seem completely capable of flip flopping? Maybe that comes from firing your conscience and having no compelling standards that you would go all out fighting for. ie: Not one of them go after any corporation or industry like Warren and Sanders. Most of them seem to teeter on the edge rather than verdantly fighting for it. I think we need to ask these candidates why they take money from companies they claim to be against?
 
 
+1 # Citizen Mike 2015-02-02 11:07
Ah, this is quite safe for this false liberal to propose now that a Republican congress assures it will never be passed. Helps Obama to appear progressive while faithfully continuing to serve the interests of the Ruling Class. It is an empty gesture and completely deceptive.
 
 
+4 # Pikewich 2015-02-02 11:40
Question: why did the president wait to initiate this now when it has less than a snowballs chance in hell of surviving this congress instead of when he had a Democrat majority?

Answer: Because he knows it will not pass but will fool those who want to live in suspended disbelief: that the democrat party still stands for the people.

We SHOULD know by now the democrats are merely pro-choice Republicans. That is NOT enough difference.

They have figured it out in Greece. The elections that brought the anti-austerity party in power is the equivalent of us electing a majority of Green party congress and president.

The elite must be in shock. If this change in Greece works, it will be noticed world wide.
 
 
0 # nice2bgreat 2015-02-02 17:53
.
You are wrong about this not passing.

US corporations have been amassing off-shore wealth, and moreso than ever since 2004, when Congress passed a "one-time" tax holiday, which lowered that rate from 35% to 5%.

This is another coup to have this offered up by a Democratic President.

Can you say cha-ching?
.
 
 
+4 # reiverpacific 2015-02-02 11:43
All I can say is "Good luck"!
 
 
+1 # nice2bgreat 2015-02-02 12:49
nice2bgreat 2015-01-10 13:23
nice2bgreat 2015-01-10 13:46

Quoting nice2bgreat:
.

... what is the real crime in Obama's play (ploy)?

By miring anti-Keystone activists into a quagmire of one issue, the entire activist movement has been held at arms length ... exactly where right-wing opposition (and Obama?) wants leftist activists ... CAPTIVE to one singular issue that (sh)could have been solved long ago... SOLELY BY OBAMA.

Regardless of whether one believes Obama has wanted this outcome, his actions (or lack of actions) have brought us here, keeping activists there.

So, rather than say, ... LEFTIST ACTIVISTS GOING ON THE OFFENSE...

To push for legislation establishing "paper" ballots -- cast ballots that show votes, rather than electronic signatures -- as the only official ballots.

An offensive push by activists to close tax loopholes that allow foreign profits to be held off-shore, previously estimated at over $30 Trillion Dollars -- without paying taxes, until "re-patriated". US corporations are awaiting a re-do on their 2004 (so-called one-time) Tax Holiday -- a temporary reduction of taxes for foreign profits to 5%... that is right FIVE PERCENT.

http://thinkprogress.org/economy/2011/05/14/173951/repatriation-flashback/

...
.
 
 
+1 # nice2bgreat 2015-02-02 13:04
My point is, that less than a month ago, I proposed that leftists ...

Quoting nice2bgreat:

2015-01-10 13:46

An offensive push by activists to close tax loopholes that allow foreign profits to be held off-shore, previously estimated at over $30 Trillion Dollars -- without paying taxes, until "re-patriated". US corporations are awaiting a re-do on their 2004 (so-called one-time) Tax Holiday -- a temporary reduction of taxes for foreign profits to 5%... that is right FIVE PERCENT.

http://thinkprogress.org/economy/2011/05/14/173951/repatriation-flashback/

...


This is a classic Obama compromise:

Closing loopholes, setting dates for penalties to occur, and forcing the tax-dodging US corporations to pay their NORMAL 35% -- something that could have been done with while the Democrats had majorities in both Houses; and it is likely can be done properly, only, without a Republican majority in Congress (let alone, a Democratic "majority").

No, as a compromise to the SUPPOSED-ONE-TI ME sweetheart deal of 5%, Obama is going after the whole 14%.

So, instead of raising $10.5 Trillion Dollars, the great Obama is after $238 Billion?
.
 
 
0 # nice2bgreat 2015-02-02 13:28
http://readersupportednews.org/news-section2/320-80/8230-30-major-companies-paid-zero-income-tax

I am still trying to understand the $238 Billion dollar figure.

14% of $30 Trillion Dollars, which is the approximate amount that I recall reading that U.S. corporations are withholding offshore, is $4.2 Trillion Dollars -- I will source this as soon as I find it.

http://www.readersupportednews.org/off-site-opinion-section/72-72/6709-wheres-the-uproar

http://projectavalon.net/forum4/showthread.php?26227-Corporate-Tax-Holiday-in-Debt-Ceiling-Deal-Where-s-the-Uproar
 
 
0 # nice2bgreat 2015-02-02 13:25
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

http://www.readersupportednews.org/off-site-opinion-section/72-72/6709-wheres-the-uproar
.
 
 
-4 # nice2bgreat 2015-02-02 13:56
.
I take a certain pride in feeling that my comments reduce the number of the usual worthless RSN reader-comments.
.
 
 
-8 # lnason@umassd.edu 2015-02-02 14:12
The President's proposal is one of the dumbest things he has ever suggested. No other developed country on earth taxes corporations on foreign earnings. The unwritten rule is that every country gets to tax corporate earnings made in its own country and, except in the US, no one gets to double tax those earnings when they are repatriated. It is our stupid double-tax that forces corporations to keep their foreign earnings in foreign countries.

If congress were dumb enough to accept this proposal, the US would see every major international corporation move elsewhere. And they would take their jobs and their financial assets and their managers with them.

This is so dumb, I can hardly believe anyone would think it is a good idea. There is no bound to human ignorance I guess.

Lee Nason
New Bedford, Massachusetts
 
 
+2 # Billy Bob 2015-02-02 20:02
I mainly checked out this link to see which of you right-wingers would defend the corporations shipping American jobs overseas. Call it "rubber-necking ". It's the same kind of morbid curiosity that forces people to look at the results of a nasty car accident.

You were one of my most likely candidates.

Billy Bob
Earth
 
 
+1 # PABLO DIABLO 2015-02-02 14:32
"If you have a knife in my back five inches, and you take it out two inches, you haven't solved the problem". --- Malcom X
The Democrats take the knife out two inches and the Republicans push it back in. The continuing inability for them to work together is merely a "smokescreen" to insure corporate profits. WAKE UP AMERICA.
 
 
-3 # Schertzing 2015-02-02 14:37
There are certainly problems with greed and inequality. Democrats have not lived up to our ideals always. I ran for Congress last election and it was a fascinating process even for this politician. Nothing about challenges with Democrats makes Republicans at all appealing.
But the President has every right to make proposals like this. He is in a different political place this year. Democrats ran from him in the last election and his rising positives and the Republican legislative control changes everything.
 
 
0 # nice2bgreat 2015-02-02 17:45
.
Hey, politician. You sound like a typical Democratic apologist and would be at best, a mediocre to disgraceful representative, and at worst, a typically shameful representative.

Address my comments, above.

You say that the President has every right to make a proposal like this, which is absolutely true.

There are, however, great questions regarding Obama's intentions.

It seems to me, that Obama is simply handing out Trillions of taxpayer-dollar s to the same corporations that have been scheming for this since 2004. All the while, Obama, seemingly out of nowhere, is trying to make it seem like he's found something that wasn't there previously.

When in fact, (actual) progressives want to go after these corporate OBLIGATIONS to the United States of America, rather than vindicate yet another audacious and obvious money-grab by US tax-dodging corporations.

Why did Obama not go after this money at a much higher rate when Democrats controlled Congress? ... Try not to make the answer for this one sound too pathetic.

And by the way, ... for Obama, a Republican controlled Congress is just the way he likes it. He can ram shit like this through for two more years, while political hacks and surrogates like you argue irrelevant things, like whether he has "every right to make proposals like this", rather than whether it is the best option, let alone wise.

I also take issue with your implication that Democrats lost elections because they ran away from Obama.
.
 

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