Obama Takes Aim At Tax Havens, Loopholes

Plan Would Eliminate Tax Deductions For Some Foreign Profits, Crack Down On Wealthy Who Send Money To Tax Haven Countries

(CBS/ AP)  President Barack Obama vowed Monday to "detect and pursue" U.S tax evaders and go after their offshore tax shelters.

In announcing a series of steps aimed at overhauling the U.S. tax code, Mr. Obama complained that existing law makes it possible to "pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York."

The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home and called for more transparency in bank accounts that Americans hold in notorious tax havens like the Cayman Islands.

"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Mr. Obama said. (Read Mr. Obama's fulll remarks.)

The president, who hammered on this issue during his long campaign for the White House, said at a White House event that his plan would generate $210 billion in new taxes over 10 years and "make it easier" for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in a federal deficit expected to swell to $1.2 trillion in 2010.

Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.

He said the government also is hiring nearly 800 new IRS agents to enforce the U.S. tax code.

Congress is expected to resist significant portions of Mr. Obama's plan.

CBS News correspondent Bob Fuss reports that key Republican leaders in Congress say they will oppose the plan. Senate GOP leader Mitch McConnell said it would hurt American companies trying to compete globally and a recession is "the wrong time to raise taxes."

Mr. Obama is not the first president to try to raise more revenue by closing tax loopholes and many in congress have long championed the idea, Fuss added. But lobbyists for the corporations and wealthy individuals that use the loopholes and argue tax havens like the Cayman Islands help them compete in the global economy, have always managed to stop tough legislation from passing and it won't be easy this time either.

The administration is not seeking to repeal all overseas tax benefits. Mr. Obama called his proposal "a downpayment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations."

"Nobody likes paying taxes, particularly in times of economic stress," Mr. Obama said. "But most Americans meet their responsibilities because they understand that it's an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being."

The current tax code, he said, makes it too easy for "a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all."

Mr. Obama said he was willing to make permanent a research tax credit that was to expire at the end of the year and is popular with businesses. Officials estimate that making the tax credits permanent would cost taxpayers $74.5 billion over the next decade.

But administration aides said 75 percent of those tax credits cover the cost of workers' wages.

Under existing laws, companies with operations overseas pay U.S. taxes only if they bring the profits back to the United States. If they keep the profits offshore, they can defer paying taxes indefinitely. Mr. Obama's plan, which would take effect in 2011, would change that.

Obama officials also said they would close a Clinton-era provision that would cost $87 billion over the next decade by letting U.S. companies "check the box" and treat international subsidiaries as mere branch offices. Officials said it was meant as a paperwork shortcut that is now a widely used and perfectly legal way to avoid paying billions in taxes on international operations.

Treasury Secretary Timothy Geithner joined Mr. Obama for the announcement. He said the proposals would end "indefensible tax breaks and loopholes which allow some companies and some well-off citizens to evade the rules that the rest of America lives by."

Geithner called them "common-sense changes designed to restore balance to our tax code."

The White House said that in 2004, multinational corporations enjoyed an effective tax rate of 2.3 percent in the United States because of such allowances. Aides said that was the most recent year available for analysis.

They said the situation was indefensible.

[20American10]

To All True Americans, Remember the day when the words " United States TREASURY" meant a reserve of Wealth that was owened and created by the people of this Great Nation? Well open your history books children, We are about to rewrite history. On this blessed day we shall committ ourselves to following the words of the President of this Great Nation and in return he shall by the hand of the Almighty restore US to being The World Leader into tommorow. Now if you have a problem with these words then you must be a stranger to our land. WE Respect and Obey Our President.
Semper Fi
JGP

[livinginca]

Obama tax relief the big $13 per paycheck. Well, I want to thank Mr. Obama for my $26 extra I received with my last 2 paychecks before I lost my job to cheaper labor in India.

[livinginca]

Geitner may have finally paid his taxes, but only paid because he knew Obama was about to announce his nomination. Geitner did not do this, to do the right thing. He profited by paying in his new position, salary, etc. Lets see he had close to 8 years before he had to pay. Will we get the same treatment, if we owe??? I doubt it.

[wyzguy11]

Is it any wonder that Rupert Murdoch's NewsCorp (NWS) tops the list of companies that uses overseas tax-havens. Come on Murdoch.....Pay your fair share or give Billy O'Reilly a pay cut!!!

[hypnotoad72]

One word for Obama - "GEITNER"
Posted by enriquieGonzales at 10:14 AM : May 5, 2009
----

I can't argue too much about that. :) Then again, isn't it true Geitner paid up? That still puts him a step or two better... indeed, such a blemish might encourage President Obama to reign in loopholes. Oh dear, I just destroyed more republican cant with what is actually HAPPENING under the Obama presidency!

http://goldismoney.info/forums/showthread.php?t=339160

Oh dear, it looks like Geitner might have ponied up after all.

You lot can give it up.

[hypnotoad72]

Wow. Republicans always find new spin to conjure up and CANT. (You can look it up, I'm not your personal encyclopedia or battery operated toy...)

Republicans talk of doing what's right, for the "country first", ethics, fiscal responsibility, pulling ourselves up by our own bootstraps, and other things - but when it comes down to the reality, all they can do is whine, mewl, and bleat because they support the things that are the antitheses of what they say!!

And then they blame everybody else anyway.

I am prouder and more reassured of OUR President than ever before.

Large corporations that cheat should not be rewarded. Or that's what I keep hearing from the people that say it but then allow it to happen. That's also why Republicans were voted out in 2006 and 2008, and since all they can do is repeat the same parrotheaded jingo and seem incapable of rational thought, 2010 isn't going to help them either.

Convince me of otherwise. I am a centrist who HAS voted Republican in the past (**gasp**) but things are at a head. People on BOTH political parties were tired of abuse. And I doubt anything would have differed under a McCain/Palin leadership.

[actornaught]

One house in the Cayman Islands is the address for 18,000 American companies' "subsidiaries".

That's sure creating alot of American jobs....

[hungry1968-15]

They just taxed those bonuses at a 90% rate and his proposed tax reform is for 39%...do you never READ anything, or do you just follow along with the BS put out in 30 second sound bites by the commie press?
Posted by Rowdy108 at 7:35 AM : May 5, 2009






Sorry - my heart's not bleeding for the AIG vermin that had their stolen booty taxed at 90%.

[hungry1968-15]

Well, you use Wikipedia, I'll use the constitution of the US.....

Posted by Rowdy108 at 7:32 AM : May 5, 2009





If you ARE going to use the "constitution", could you at least READ AND UNDERSTAND it first?

[hungry1968-15]

Just read his proposal. It is to tax companies on profit earned overseas and not allow them credit for taxes paid to he foreign country. Basically, he is proposing a double taxation scheme which will put US based companies at an extreme disadvantage. This proposal is ..well just lunacy.
Posted by bmallen3 at 7:10 AM : May 5, 2009






That might be what Fox News is telling you, but it's NOT reality.

US companies are sheltering their earnings off shore, preventing them from paying their "fair share" of taxes.

This plan will recoup that "stolen money".

[hungry1968-15]

Well, first of all, I consider 90% to be a majority of money....and I also consider 39% to be a whopping chunk of my money that I earned...and the GOVERNMENT didn't earn but thinks they have a right to take.

So tell me again, what the GOVERNMENT has done to deserve such big chunks of money?
Posted by Rowdy108 at 7:05 AM : May 5, 2009





Where are you getting these 90% and 39% figures from?

[hungry1968-15]

Nope, the Constitution doesn't allow them to make administrative law that applies to anything except...

National Security
Federal Tarriff's
Federal Lands
National Montary System
Insfrastructure that connects the states....

Nothing in those areas apply to education, health care, energy, light bulbs, cars, hospitals, fire departments, police departments, natural resources....
Posted by Rowdy108 at 6:59 AM : May 5, 2009





I'll use wikipedia, since even that might be too complex for you to understand:

http://en.wikipedia.org/wiki/Administrative_law

"Administrative law is the body of law that governs the activities of administrative agencies of government. Government agency action can include rulemaking, adjudication, or the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public law. As a body of law, administrative law deals with the decision-making of administrative units of government (e.g., tribunals, boards or commissions) that are part of a national regulatory scheme in such areas as police law, international trade, manufacturing, the environment, taxation, broadcasting, immigration and transport. Administrative law expanded greatly during the twentieth century, as legislative bodies worldwide created more government agencies to regulate the increasingly complex social, economic and political spheres of human interaction."

[hungry1968-15]

"the government getting all the taxes it deserves from businesses. "

Posted by hungry1968-15 at 6:50 AM : May 5, 2009

THAT sentence, Hungry...as usual you don't even read what you cut 'n paste.

Again, tj, I'm waiting for YOUR answer! What does the GOVERNMENT do to deserve all that money?
Posted by Rowdy108 at 6:56 AM : May 5, 2009





Hey stupid - that says: "The government should get what it DESERVES."

It DOES NOT say that they should "get most" as you claim.


*******.

[hungry1968-15]

You got a clue where they get the authority to do all this, Hungry?
Posted by Rowdy108 at 6:52 AM : May 5, 2009




"Administrative Law"

[hungry1968-15]

Yeah, the CIA is a major portion of national security, which the Dumbama America Sucks Campaign just destroyed. But the feds are responsible for supporting it. Too bad he just rendered them null and void.
Posted by Rowdy108 at 6:45 AM : May 5, 2009





Huh?

[hungry1968-15]

Who said that government deserves the "major portion"?
Posted by hungry1968-15 at 6:41 AM : May 5, 2009


Well, Hungry, tj did....and I'm still waiting for HIS answer.
Posted by Rowdy108 at 6:42 AM : May 5, 2009



Which sentence?






If that was meant to scare people, nice try. Here's your answer:
Firstly, the fear of higher prices should be no deterrent to the government getting all the taxes it deserves from businesses. According to your logic, since we the consumers will eventually have to pay for these higher taxes, that in and of itself should make give us the impetus to allow tax cheating businesses to continue cheating the government? Is that what you're saying? Also, if the raise their prices too high, consumers will eventually stop buying or go to a competitor. This phenomenon is called 'competition'. If a competitior can make a similar good with similar quality for a lower price, people will eventually gravitate to that product. Allowing some comapnies the ability to skirt American taxation just to keep prices lower is absurd. Now, I have aquestion for you: Since these companies have failed to pay ANY taxes on their money---sometimes for years---who do you think is making up the difference for this shortfall?
Posted by tj217-2009 at 6:29 AM : May 5, 2009

[hungry1968-15]

Actually, it's really entertaining watching you Limbaughricans writhe around trying to rationalize why your entire philosophy is being rejected as un-American.
Posted by LimbaughricansSuck at 6:37 AM : May 5, 2009





I LOVE the "rebranding" that's taking place:

http://www.dailykos.com/storyonly/2009/5/2/726822/-The-National-Council-for-a-New-America-(aka-GOP-loses-election)


Talk about hilarious!!!!

[ameroseas]

Some of you Obamacans crack me up. He could announce a 90% tax on millionaires and you would defend it as the best thing for our country! He could announce that he is stopping the foreign earned income credit (ie Loophole) for Americans working overseas, and you would defend that as a step to bring the Americans home and something that was good for America! The only problem would be you would not have a clue whereof you speak.

[hungry1968-15]

C'mon, tj, let's hear how the GOVERMENT DESERVES the major portion of all the wealth created in this nation.

Now this is what's going to be hilarious, and I'm certainly interested in hearing YOUR answer!
Posted by Rowdy108 at 6:36 AM : May 5, 2009






Who said that government deserves the "major portion"?

[hungry1968-15]

C'mon, tj, let's hear how the GOVERMENT DESERVES the major portion of all the wealth created in this nation.

Now this is what's going to be hilarious, and I'm certainly interested in hearing YOUR answer!
Posted by Rowdy108 at 6:36 AM : May 5, 2009






Who said that government deserves the "major portion"?