Ahhhh, no it's more like closing the gigantic loop holes that were created by the Clinton administration and that in turn lead to many corporations setting up their extended businesses to off shore locations {outsourcing}!
But as with a grocery store tabloid that's a pretty catchy lead in title for a topic...
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http://www.bloomberg.com/apps/news?pid=20601087&sid=a4.7CIfqd5h0
Obama Seeks End of Corporate Tax Break to Raise $190 Billion
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By Ryan J. Donmoyer
May 4 (Bloomberg) -- President Barack Obama proposed raising about $190 billion over the next decade by outlawing three offshore tax-avoidance techniques used by U.S. companies such as
Caterpillar Inc. and
Procter & Gamble Co.
Obama’s plan also would make it riskier for Americans to stash money in tax-havens.
The tax code is “full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share,” Obama said at the White House today, as he outlined the plan along with Treasury Secretary
Timothy Geithner.
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And there is this interesting article too!
http://www.groco.com/readingroom/tax_obama_corporate_proposal.aspx
More Work for Accountants! President Obama’s Corporate Tax Proposal
By
Ron Cohen, CPA, MST
Partner
Greenstein, Rogoff, Olsen & Co., LLP
In the White House summary of corporate tax proposals:
http://media.npr.org/documents/2009/may/whitehouse_taxhavens.pdf
At “Backgrounder” Article I. Sec. 1, it states:
"Current Law
Companies Can Defer Paying Taxes on Overseas Profits Until Later, While Taking Tax Deductions on Their Foreign Expenses Now: Currently, a company that invests in America has to pay immediate U.S. taxes on its profits from that investment. But if the company instead invests and creates jobs overseas through a foreign subsidiary, it does not have to pay U.S. taxes on its overseas profits until those profits are brought back to the United States, if they ever are. Yet even though companies do not have to pay U.S. taxes on their overseas profits today, they still get to take deductions today on their U.S. tax returns for all of the expenses that support their overseas investment.
The Administration’s Proposal
Level the Playing Field: The Administration’s commonsense proposal, similar to an earlier measure proposed by House Ways and Means Chairman Charles Rangel, would level the playing field by requiring a company to defer any deductions – such as for interest expenses associated with untaxed overseas investment – until the company repatriates its earnings back home.
In other words, companies would only be able to take a deduction on their U.S. taxes for foreign expenses when they also pay taxes on their foreign profits in the United States. This proposal makes an exception for deductions for research and experimentation because of the positive spillover impacts of those investments on the U.S. economy.”
Comment: The proposal lacks specifics. Chairman Rangel made a proposal in 2007 (HR 3970) which died in committee. (Here’s a link to the text:
http://www.govtrack.us/congress/billtext.xpd?bill=h110-3970.) See Sec. 3201 of the bill.
(c) Definitions and Special Rule- For purposes of this section--
(1) FOREIGN-RELATED DEDUCTIONS- The term `foreign-related deductions' means the total amount of deductions and expenses which would be allocated or apportioned to gross income from sources without the United States for the taxable year if both the currently-taxed foreign income and deferred foreign income were taken into account.
This language is similar (“allocated and apportioned”) to the Regulations under IRC Reg. 1.861-8, used to determine foreign “source” income and expenses for purposes of computing foreign tax credits.
Above it states that an exception will be made for research and development, implying that all other types of expenses on the taxpayer’s tax return will be subject to some type of U.S. versus foreign source allocation.
Those who work with these types of computations know the time, effort and mind-numbing spreadsheets and/or computer programs required to do proper “sourcing” under the foreign tax credit rules. Foreign tax credits don’t come into play until an actual dividend (or deemed dividend under Subpart F or other sections) occurs.
In contrast, the allocation and apportionment the President proposes would be required every year, for a company with foreign subsidiaries, for purposes of determining the allowable U.S. tax deductions, even if no actual or deemed dividend was received by the U.S. company.
As a result, and if history is any guide (e.g., the 1986 so called “simplification” tax act) we can only expect – by the time Congress has drafted the actual legislation -- another complex layer of computations to be imposed on taxpayers.
I often wish the Members of the House Ways and Means Committee and the Senate Finance Committee were required to calculate a company’s taxes – trapped in a room until they get the right answer -- using a 10-Key calculator, a pencil and paper, before they are allowed to impose rules and regulations on the rest of us. That would sensitize them to the compliance burden their rules create.
