May 27, 2009 --
In an effort to pay for its increased spending the Obama Administration is going after corporate overseas earnings. This could mean diminished competitiveness for U.S. companies operating overseas. Companies like Intel and Nike would suffer under new rules proposed by the Administration. “The bottom line is they have proposed a tax increase of $190 billion on overseas activities of U.S. multinationals,” said Kenneth J. Kiles who has represented General Electric, Microsoft and others on tax issues.
The Administration has already factored in the new tax receipts calculating them into its budget figures for 2011. The U.S. corporate tax rate is 35 percent. Businesses operating outside the U.S. don’t pay that on profits overseas unless they bring the money home. The current tax-deferral system is a attempt to deal with the fact that most other countries don’t tax their companies’ overseas profits. The U.S. is just behind Japan in its corporate tax rate at 39.25 percent for the combined (central, regional, and local) 2008 corporate tax rate.
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