Sunday, February 01, 2015

Just leave a donation at the door


In the latest budget proposal from the White House, President Obama is willing to tax expatriate profits one time at 14% to call them home and at 19% after that. Currently the rate is posted at 35% with a ton of loopholes to prevent corporations from paying the full rate.
Revenues from the one-time tax would be used to fund infrastructure projects and fill a projected shortfall in the Highway Trust Fund.

The budget, which is set for release on Monday, is as much a political document as a fiscal roadmap. It requires approval from Congress to take effect and full approval by the Republican-controlled legislature is very unlikely.

The White House has long been critical of practices by U.S. companies that it views as avoiding tax responsibilities at home. The proposals are part of a broader tax reform package that the Obama administration hopes will re-focus tax advantages toward middle-income Americans.

"This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely," a White House official said.

"Unlike a voluntary repatriation holiday, which the president opposes and which would lose revenue, the president’s proposed transition tax is a one-time, mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated."

Obama’s proposal is aimed at closing a tax loophole that lets multinationals avoid paying taxes on profits earned abroad, or that they shift into foreign countries from the United States to reduce their U.S. taxable income...

Foreign corporate earnings can be held offshore for years if they are classified as indefinitely invested abroad.

Research firm Audit Analytics said in April 2014 that the total of such earnings exceeded $2.1 trillion, up 93 percent from 2008 to 2013.

At that time, General Electric Co (GE.N) had the most stored abroad, at $110 billion, the research firm said. Next were Microsoft Corp (MSFT.O), with $76.4 billion, Pfizer Inc (PFE.N), with $69 billion, Merck & Co Inc (MRK.N) with $57.1 billion and high-tech group Apple Inc (AAPL.O) with $54.4 billion, it said.
Needless to say, anything short of a rebate to soothe the poor corporations that had to hold the money overseas for so long is anathema to the Republican/Teabaggers. And until they can bring the money home, CEO's will have to survive on their current pittences.

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