U.S. multinationals have had a field day avoiding corporate taxes. President Obama wants to close the tax loopholes that enable these companies to pay virtually no taxes on their overseas operations. You may find this hard to believe, but American companies paid an effective tax rate of just 2.3% on the $700 billion they earned in overseas profits in 2004!
As many as 18,000 U.S. companies have set up shop in one building in the Cayman Islands to conduct the biggest tax scam in the world. It seems that U.S. companies can take a tax credit and then accelerate these credits.
Now, of course, these same corporations are marshaling their troops to fight any changes in the tax laws. John Castellani of the Business Round Table says, "It will cripple growth, reduce the competitiveness of U.S. companies and destroy jobs." The National Association of Manufacturers called the proposals "disastrous."
We can be sure that any of these changes will be subject to fierce debate. This reminds me of when President Kennedy forced the steel companies to roll back their prices. There was a cry then that the U.S. economy would fall apart. It didn't. These new proposed changes are much broader and involve a larger segment of U.S. businesses. Chances are that corporate America will survive, albeit with a lower bottom line.
Do you believe that President Obama should close these tax loopholes?
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Reader Comments (Page 1 of 1)
5-06-2009 @ 5:26AM
al coholic said...
Kennedy did his "jawboning" in a different era when the office commanded real respect and Americans truly believed that our system worked.
5-06-2009 @ 7:46AM
TX CHL Instructor said...
Laughably ironic that an administration run by tax cheats is going to get "tough" on tax "loopholes". Except for their own, of course.
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www.chl-tx.com (Thanks, BHO, for the fantastic stimulus you have given my business!)