Obama Budget to Close Offshore Tax Loopholes
The new Obama Budget will close Offshore Tax Loopholes. At least that's what the Office on Management and Budget's budget document says:
The Budget also begins to restore a basic sense of fairness to the tax code, eliminating incentives for companies that ship jobs overseas and giving a generous package of tax cuts to 95 percent of working families.
No detail as of yet as to what this means. As this CRS Report on the U.S. international taxation system shows, it could mean at least a few things:
- Elimination to multinationals' ability to defer taxes on foreign-source income;
- Elimination of the foreign tax credit, which give certain multinationals with subsidiaries in certain countries a credit for taxes they pay in the foreign country;
- Some sort of regulatory prohibition or disincentive structure to make it difficult to re-incorporate abroad, i.e. create a "new" parent company in Panama that "adopts" the "old" U.S. parent company, which becomes the kiddie and ages in reverse like Benjamin Button or Mearth in Mork & Mindy.
Sources tell me we may be waiting a bit before OMB Director Peter Orzag offers any detail on this.
The other trade tidbits in the budget:
Countries and companies around the world recognize [the climate crisis] and are working day and night to develop clean energy technologies that will change everything from how we generate our electricity to how we power our cars and trucks. While the challenge is great, the promise of the moment is unparalleled. If we lead the world in the research and development of clean energy technology, we can create a whole new industry with high-paying jobs that cannot be shipped overseas...
Reforming the Market Access Program (MAP). The Budget reforms MAP by reducing program funding for overseas brand promotion and minimizes the benefits that large for-profit entities may indirectly gain as members of trade associations who participate in MAP. An annual funding reduction of 20 percent will improve the program by placing greater emphasis on promoting generic American agricultural products overseas and assisting small business entities.
Reforming the Market Access Program (MAP). The Budget reforms MAP by reducing program funding for overseas brand promotion and minimizes the benefits that large for-profit entities may indirectly gain as members of trade associations who participate in MAP. An annual funding reduction of 20 percent will improve the program by placing greater emphasis on promoting generic American agricultural products overseas and assisting small business entities.
UPDATE: A colleague alerts met to page 122 of the budget document, which indicates that some non-elaborated combination of "international enforcement, reform deferral and other tax reform efforts" is projected to generate $210 billion in additional federal revenue over 2010-2019.
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