Ouch to these corporations.
President Barack Obama plans to propose changes to tax policy certain to be unpopular with corporations with international divisions and individuals who use tax havens. Obama also plans to ask Congress for 800 new federal tax agents to enforce his broad requests.
Obama’s two-piece plan, to be announced at the White House on Monday, would eliminate some tax deductions for companies that earn profits in countries with low tax rates, as well as consider U.S. citizens who use tax havens such as the Bahamas or Cayman Islands guilty of violating U.S. tax laws. If Obama wins congressional approval for the changes — and he faces a challenge on Capitol Hill — it could deliver $210 billion in tax revenue over the next decade.
Treasury Secretary Timothy Geithner was to join Obama for the 11 a.m. comments.
Officials described the administration’s plan ahead of the announcement on the condition of anonymity so they wouldn’t upstage the president’s remarks. However, they acknowledged the political challenges facing the plan. The administration won’t seek a complete repeal of overseas tax benefits and, although the rule changes are narrower than some anticipated, business leaders still oppose them as a tax hike. Obama aides countered that the plan is a step toward a massive overhaul of international financial regulations the president has promised.
In exchange, 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 paid workers’ wages; given the struggling economy, aides were reluctant to do anything that could add more Americans to the unemployment rolls.