February 2, 2015 11:47 AM | Permalink |
Following is a statement by Robert McIntyre, director of Citizens for Tax Justice, regarding newly released details of President Barack Obama’s international business tax reform plan, which includes a 14 percent mandatory transition tax on the more than $2 trillion in profits that multinational companies currently hold offshore and a 19 percent minimum tax rate on U.S. multinational’s future foreign income.
“President Barack Obama’s decision to challenge international tax avoidance is laudable, but his execution leaves a lot to be desired. If companies were required to pay the same tax rate on their foreign profits as their domestic income, then they should owe 35 percent on their accumulated foreign profits, rather than the 14 percent that President Obama is proposing under his new transition tax.
“Such a low tax rate would disproportionately benefit the worst corporate tax dodgers and leave billions in tax revenue on the table that could be used to make critical public investments.
“In principle, President Obama’s international corporate minimum tax is a smart move because it would no longer allow corporations to defer paying U.S. taxes until they bring those foreign profits back to the United States. In practice however, the proposed 19 percent rate is far too low and would leave in a place a system that favors international over domestic investment and encourages companies to game the system to avoid U.S. taxes.
“Its unfortunate that President Obama continues to insist on revenue-neutral corporate tax reform overall, rather than using this opportunity to call for raising revenue over the long term.”