Obama wants crackdown on firms that dodge taxes with offshore havensby The Associated Press on May. 05, 2009, under Edge, Nation/World, Special
He also targets codes that encourages companies to “ship jobs overseas”
WASHINGTON – President Obama promised sternly on Monday to crack down on companies “that ship jobs overseas” and duck U.S. taxes with offshore havens.
It won’t be easy. Democrats have been fighting – and losing – this battle since John F. Kennedy made a similar proposal in 1961.
Obama’s proposal got a lukewarm response Monday from Capitol Hill. Sen. Max Baucus of Montana, the Democratic chairman of the Senate Finance Committee, said the plan needed further study, even though similar ideas have been around for years.
The president’s plan would limit the ability of U.S. companies to defer paying U.S. taxes on overseas profits. At the same time, Obama would step up efforts to go after evaders who abuse offshore tax shelters.
Obama said his plan would raise $210 billion over the next 10 years, though no tax increases would go into effect until 2011.
Lost revenue isn’t the only problem, Obama says. He contends the current system gives companies an incentive to invest overseas rather than creating jobs in the U.S. “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.,” Obama said Monday.
The business community argues the deferral system helps it compete against foreign companies that pay taxes only in the countries where they generate profits.
Obama also proposed a package of disclosure and enforcement measures designed to make it harder for financial institutions to help wealthy individuals evade taxes in overseas accounts. Obama said the government is hiring nearly 800 new IRS agents to enforce the tax code.
Obama’s plan would impose billions of dollars in new taxes on many of the nation’s largest corporations, tax experts said.
Obama agreed to make permanent a research tax credit that would provide firms about $75 billion in breaks over the next 10 years.