Thursday, January 26, 2012

White House Tax Plan Designed to Keep Companies in U.S.

A White House proposal that would require U.S. multinational corporations to pay a minimum tax on their overseas profits is designed to make the corporate system fairer and discourage companies from moving to lower-tax jurisdictions.

The new tax would be designed to prevent other countries from attracting American businesses through low tax rates and the savings would be invested in cutting taxes in the United States, according to a fact sheet released by the White House.

The plan also will include a revenue-neutral package of measures that officials say will support manufacturing while discouraging outsourcing and encouraging“insourcing.”

The provisions include:

1.     Ending the tax deduction for moving expenses for companies that move overseas 
2.     Support to cover moving expenses for companies that close production overseas and bring jobs back to the United States
3.     Reinstating the expired Section 48C Advanced Energy Manufacturing Tax Credit
4.     Closing a loophole that allows companies to shift profits overseas (raises $23 billion): Corporations right now can abuse the tax system by inappropriately shifting profits overseas from intangible property created in the United States.
5.     Making companies pay a minimum tax for profits and jobs overseas through eliminating tax incentives to ship jobs offshore by ensuring that all American companies pay a minimum tax on their overseas profits. (possibly a minimum tax on foreign Trade or Business Income?) and
6.     Cracking down on overseas tax avoidance and loopholes, includes signing into law the Foreign Account Tax Compliance Act (FATCA), which targets tax evasion by U.S. citizens holding investments in foreign accounts, as well as measures to crack down on abuse of foreign tax credits through games that allowed multinational companies to inappropriately reduce the amount of taxes they paid here at home.

For a text of the fact sheet released by the White House go to BNA:

1 comment:

  1. Ways and Means Still Considering Subpart F Exceptions Under Territorial System, Aide Says

    Posted February 2, 2012, 2:51 P.M. ET

    Two Subpart F exceptions remain under consideration as the House Ways and Means Committee reviews a discussion draft that proposes a territorial tax system, a senior committee aide said Feb. 2.

    Ray Beeman, Ways and Means tax counsel and special adviser for tax reform, said the committee is still looking at both the active financing exception and a lookthrough provision for controlled foreign corporations.
    Speaking at a conference sponsored by the Practising Law Institute, Beeman said the exceptions are still being considered, but “we're holding off on what we might do there until we know where we're headed on base erosion.”

    Under one of three options to limit revenue losses under the plan, low-taxed cross-border foreign income would be treated as Subpart F income. The committee is likely to take a more comprehensive look at Subpart F in general once it works out questions on the base erosion provisions, Beeman said.