Obama Proposes One-Time Tax On $2 Trillion US Companies Hold Overseas

mrspoonsi writes with news about a new proposed tax on overseas profits to help pay for a $478 billion public works program of highway, bridge and transit upgrades. President Barack Obama's fiscal 2016 budget would impose a one-time 14 percent tax on some $2 trillion of untaxed foreign earnings accumulated by U.S. companies abroad and use that to fund infrastructure projects, a White House official said. The money also would be used to fill a projected shortfall in the Highway Trust Fund. "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," the 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." In the future, the budget proposes that U.S. companies pay a 19 percent tax on all of their foreign earnings as they are earned, while a tax credit would be issued for foreign taxes paid, the official said.

Comments

Double Irish

[AmiMoJo]

This is clearly aimed at companies abusing the "Double Irish" system. Seems like the rate should be set much higher, so that companies are punished and lose more than they would if they did the right thing and repatriated profits and paid the normal tax rates on them.

Re:Double Irish

[modmans2ndcoming]

they could pull an Apple and issue bonds in the EU to raise money that can be repatriated to the US without taxation and then repay those bonds in Euros held over seas.

Re:Double Irish

[140Mandak262Jamuna]

Because corporations shield the shareholders from liability. It costs nothing to create a corporation. It costs nothing to create a series of corporations one owning other. It is easy to funnel all the assets, income one way and stop the liabilities from flowing along with the assets and income. Thus the tail end corporation will have all the liabilities without any asset to pay for. Corporations don't go to jail. We must tax the corporation for getting this special privilege of being able to do business without anyone having to go to jail.

When limited liability corporations were first proposed, the biggest opposition was due to, "If the corporation commits murder who goes to jail?". Corporations must be taxed, and then the dividends paid to the shareholders must be taxed again, and when the dividends are spent we will assess them sales taxes again, if the post-tax dividend is used to buy a home, we will tax the home year after year.

We have coddled the tax evaders and their apologists for far too long. Government can tax anything for any reason. We will use it to the fullest extent. Don't like it, go somewhere like Somalia and conduct your business. Good riddance.