Tags: obama | overseas | tax

Obama Ditches Tax on Companies' Foreign Operations

Wednesday, 14 Oct 2009 10:56 AM

By Dan Weil

  Comment  |
   Contact  |
  Print  
|  A   A  
  Copy Shortlink

President Obama has abandoned a plan to impose $210 billion in taxes on U.S. companies with operations overseas.

The move came after a slew of businesses complained about the levy. Still, White House officials tell The Wall Street Journal that the idea hasn’t been abandoned completely. It could be revived next year as part of a broader tax overhaul.

While most developed countries tax their companies only on revenue earned at home, the United States taxes companies on worldwide profits.

Special: Get Sarah Palin’s New Book – Incredible FREE Offer -- Click Here Now.

Current law allows U.S. corporations to defer paying taxes on money earned overseas until the money is repatriated.

Those who support the rule change say the current regulation gives companies incentive to duck U.S. taxes by moving production abroad. During the presidential campaign Obama vowed repeatedly to "end tax breaks for companies that ship jobs overseas."

But U.S. corporate executives argue that the deferral provision makes them more competitive globally. And that in turn allows them to expand their U.S. operations.

If the deferral is axed, they say their businesses will suffer to the point that they must cut jobs domestically.

Given the vociferous opposition from business, the White House was forced to backtrack. It doesn’t want to alienate the business community while trying to pass healthcare reform, stronger bank regulation and climate control legislation.

The Obama administration had trumpeted the proposed change as an overdue repair to the tax code and potentially an important source of revenue.

"This has gone all of a sudden from red-hot to white-cold," Michael Klayko, chief executive of Brocade Communications Systems, told The Journal.

But he’s worried that if the idea becomes part of the healthcare debate, "it could go back to red-hot again."

Andrew Busch, global currency strategist at BMO Capital Markets, praised the administration’s change of heart.

“Changing existing tax treaties/arrangements with other countries is an extremely delicate and difficult task,” he wrote on CNBC.com. “Essentially, it creates more negative unintended consequences than positive tax flows into the U.S. Treasury's coffers.”

Special: Get Sarah Palin’s New Book – Incredible FREE Offer -- Click Here Now.

© 2014 Newsmax. All rights reserved.

  Comment  |
   Contact  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Obama Sought Immigration Order for 'Fullest Extent' of His Legal Authority

Friday, 28 Nov 2014 22:11 PM

Months before his landmark announcement about executive action on immigration, President Barack Obama entered into disc . . .

Rick Perry Revs Up Campaign for 2016

Friday, 28 Nov 2014 21:33 PM

Texas Gov. Rick Perry will spend his last month in office meeting with more than 500 major GOP bundlers and donors in De . . .

Pope Francis Heads to Istanbul in Symbolic Visit

Friday, 28 Nov 2014 21:21 PM

Pope Francis on Saturday heads to Istanbul for the second leg of his first trip to Turkey, in a richly-symbolic visit se . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved