Tags: Obama | Taxes | Business

Obama Seeks Higher Taxes on Big Business

Monday, 13 Feb 2012 01:12 PM

President Barack Obama's 2013 budget proposal, released on Monday, calls for raising hundreds of billions of dollars from U.S.-based global companies, while ending cherished deductions and tax breaks for oil companies and other big firms.

Resembling previous proposals from the White House, the latest plan renews Obama's focus on raising taxes on the wealthy and reining in corporate tax avoidance.

But the plan is seen largely as a campaign document that looks ahead to Obama's re-election challenge in November, with little chance of winning congressional approval.

Below are major tax ideas Obama proposes for the corporate sector. Cost estimates are for a decade unless otherwise noted, though not all proposals have revenue estimates.

The administration will separately lay out a set of principles to revamp the overall corporate tax system in the coming days, including a proposal to lower the top 35 percent corporate rate.

 

GENERAL BUSINESS PROVISIONS

* BONUS DEPRECIATION - One of few policies backed by Republicans, Obama wants to extend for one more year the 100-percent write-off of certain new capital and equipment investments for businesses of all sizes.

* NEW HIRES - Obama proposes a new 10 percent tax credit for new hiring and wage increases.

* LAST IN, FIRST OUT ACCOUNTING - The plan repeals this type of accounting. Companies, especially oil and gas firms, oppose the change as it would force them to revalue their old inventory to current, higher prices. Revenue: $74 billion.

 

INTERNATIONAL PROVISIONS

* TIGHTENING PROFIT "DEFERRAL" - Corporations could no longer deduct interest expenses on foreign earnings with deferred income taxes. These deductions would have to be deferred, as well. Revenue: $38 billion.

* FOREIGN TAX CREDIT POOLING - Requires that foreign tax credits from dividends paid to a parent company be determined on a pooling basis, not individually. This aims to close what critics call a loophole that lets companies claim more in credits than would be paid in U.S. taxes by manipulating which foreign subsidiaries pay out dividends. Revenue: $61 billion.

* INTANGIBLE PROPERTY - Closes a tax break that allows U.S. companies to shelter profits overseas from intangible property, like royalties from a drug patent. Revenue: $23 billion.

* DEDUCTIONS FOR MOVING EXPENSES - Limits a tax break for moving expenses when a U.S. company ships operations overseas. Obama would give a tax credit of 20 percent for the expense of moving operations back to the United States. The White House said this is revenue neutral.

 

MANUFACTURING, OIL, OTHER

* RESEARCH AND DEVELOPMENT TAX CREDIT - Makes permanent a popular provision among both parties, an up to 20 percent tax credit that companies of all sizes enjoy for research and experimentation. Cost: $109 billion.

* OIL AND GAS SUBSIDIES - Repeals several energy industry tax subsidies, including the oil and gas well depletion allowance; the domestic manufacturing deduction on oil and gas production; expensing of intangible drilling costs. Revenue: $30 billion to $40 billion.

* CORPORATE JETS - Repeals an accelerated depreciation tax break for corporate jet owners. Revenue: $3 billion.

* BANK TAX - Obama had proposed a "financial crisis responsibility fee" on financial firms with assets exceeding $50 billion. That idea has been changed into a proposal to tax banks to help U.S. homeowners refinance. Revenue: $61 billion.

 

BROAD CORPORATE REFORM

* CORPORATE TAX RATE - Obama has agreed with much of the business community on one thing: the top 35 percent corporate tax rate is among the world's highest and should come down. The White House is expected to spell out principles for broad corporate reform, along with a lower rate, in the coming days.

* MINIMUM OVERSEAS PROFITS TAX - The White House said it will impose a minimum tax on overseas profits, and using the revenues to help companies investing in the United States.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
632
2012-12-13
Monday, 13 Feb 2012 01:12 PM
Newsmax Inc.
 

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
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved