Monday, By PHILIP ELLIOTT, Associated Press Writer Philip Elliott, Associated Press Writer – 39 mins ago

WASHINGTON – President Barack Obama proposed Monday to raise taxes on the overseas profits of U.S. companies and to go after evaders who abuse offshore tax shelters. In announcing a series of steps aimed at overhauling the U.S. tax code, Obama complained that existing law makes it possible to "pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "

The proposal will be a hard sell in Congress. Sen. Max Baucus of Montana, chairman of the tax-writing Senate Finance Committee, offered a tepid response.

"Further study is needed to assess the impact of this plan on U.S. businesses," said Baucus, a Democrat. "I want to make certain that our tax policies are fair and support the global competitiveness of U.S. businesses."

The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home and called for more transparency in bank accounts that Americans hold in notorious tax havens like the Cayman Islands.

"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama said.

Many provisions of the complicated and much-maligned tax code in fact are worded in ways that allow people to legally cut corners. And the code is filled, likewise, with language that in many circumstances authorizes legal tax end-arounds, if not pure avoidance.

During much of his long campaign for the White House, Obama campaigned for an overhaul and simplication of the code. At the White House event Monday, he said his new proposals would generate an average of about $21 billion a year in new taxes. That would amount to only about 2 percent of next year's projected deficit of $1.2 trillion, however.

Under his plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.

Obama said the government also is hiring nearly 800 new IRS agents to enforce the U.S. tax code.

Congress is expected to resist significant portions of Obama's plan.

The administration is not seeking to repeal all overseas tax benefits. Obama called his proposal "a downpayment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations."

"Nobody likes paying taxes, particularly in times of economic stress," he said. "But most Americans meet their responsibilities because they understand that it's an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being."

The current tax code, Obama said, makes it too easy for "a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all."

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 cover the cost of workers' wages.

Under existing laws, companies with operations overseas pay U.S. taxes only if they bring the profits back to the United States. If they keep the profits offshore, they can defer paying taxes indefinitely. Obama's plan, which would take effect in 2011, would change that.

Obama officials also said they would close a Clinton-era provision that would cost $87 billion over the next decade by letting U.S. companies "check the box" and treat international subsidiaries as mere branch offices. Officials said it was meant as a paperwork shortcut that is now a widely used and perfectly legal way to avoid paying billions in taxes on international operations.

Treasury Secretary Timothy Geithner joined Obama for the announcement. He said the proposals would end "indefensible tax breaks and loopholes which allow some companies and some well-off citizens to evade the rules that the rest of America lives by."

Geithner called them "common-sense changes designed to restore balance to our tax code."

The White House said that in 2004, multinational corporations enjoyed an effective tax rate of 2.3 percent in the United States because of such allowances. Aides said that was the most recent year available for analysis.

They said the situation was indefensible.
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On the Net: http://www.whitehouse.gov

Good post Winx. One sad part of this is the drop in the bucket this amount of money is to the deficit. Maybe we (the US) should spend less.

Time to hit on the phones and emails.

This was one of the bigger reasons I voted for Obama.

If we can pull this off it will be a win-win!!
I say we because it will take everyone calling, and emailing, and generally demanding our representatives vote YES!
That's the only thing that can break the corporation's grip on our government.

It wont be easy but who'd ever thought we'd elect a black man as President in our lifetime.
It can be done, but it will take a concerted effort by WE.
The people!
Obama cant do it on his own!

It will make a big difference if the money is used to give a property tax-cut to companies who stay here, and charge companies with cheap labor and lax environmental/consumer safety laws a tariff!

Nice Post Winx!!!

Thanks.

Taking care of those loopholes is long overdue.

Why, thank you, Fanta. He kept another promise.

about time....hopefully he really does close the loopholes

interesting

It is interesting.

YEP,
Interesting indeed!

Do you need a list of your Representatives?

now fanta...why would i need that???

actually the best way to close loop hole is to charge a flat sales tax

and quit charging corp taxes at all

corp taxes are just passed on to the consumer

so you pay tax on the money when you make it

then you pay taxes companies pays when you buy it

expect price increases on the products those companies that get loop holes closed on

and the govt complains about double dipping

That's mad-talk!

A flat tax is not fair!

So you can start contacting them.

explain that please

and i said a flat sales tax

those that make more spend more

thaose that make less than 15k or whatever number could get an 80% return (all they have to do is send in their w2)

I thought this idea sounded reasonable even to me who doesn't completely understand the insanity we have now.

An interview with
Edward J. McCaffery
Fair Not Flat: How to Make the Tax System Better and Simpler

http://www.press.uchicago.edu/Misc/Chicago/555607in.html

interesting

sounds doable

We should tax people when they spend, not when they work or save, and we should do so at moderately progressive rates, so that luxurious living bears a higher tax burden than ordinary living.

Now that sounds fair!

Poor people dont require all the government related services that rich people do.

Even with this plan.
What do you do about those who live in poverty?
Make them carry around proof of poverty cards to show to merchants so they dont have to pay taxes?

You cant just charge a flat sales tax and expect it to be fair.