White House Delays Plan to Revise Rules on Taxation of Overseas Profits
October 16, 2009
World Trade\Interactive
According to press reports, the White House is putting on the back burner a plan announced earlier this year to overhaul the way the U.S. taxes profits on overseas business operations. Business groups are now working to stall a similar effort in the Senate.
In May, President Obama unveiled a plan to reform the corporate tax system in order to generate additional revenue for the federal government. Among other things, this plan would have revised the rules allowing the deferral of U.S. taxes on overseas profits by prohibiting companies from receiving deductions on their U.S. tax returns supporting their offshore investments until they pay taxes on their offshore profits. In addition, U.S. businesses that establish certain subsidiaries overseas would have to report them as separate corporations for U.S. tax purposes. The proposal would also have imposed new restrictions on the use of foreign tax credits.
The president’s plan was met with immediate concern by the international business community, and opposition has steadily increased among lawmakers worried about imposing a financial burden on companies already struggling with the global economic downturn. As a result, reports state that the White House has temporarily shelved the proposal. However, administration officials have said the president remains committed to reforming international corporate taxation and that the issue could be revisited in 2010, possibly as part of a larger tax code overhaul effort.
As a result, attention is now turning to a similar but separate initiative in the Senate spearheaded by Sen. Carl Levin, D-Mich. According to a Reuters article, Levin “will offer his Stop Tax Haven Abuse Act as an amendment to the Senate Finance Committee’s healthcare bill when it reaches the Senate floor,” apparently as a way to raise revenue to pay for the spending increases called for in that measure. However, considering the controversy already surrounding the healthcare legislation, Senate leaders may well prevent Levin’s attempt. Opponents of the tax reform bill also argue that it should go through the committee process first instead of moving straight to the Senate floor.
|
|
