Marie Leone, CFO.com | US
May 5, 2009

Ridiculous

Many of the comments and news stories about this proposal are couched in terms of economics, and then use phrases like "fair." Fair is not an economic concept, but an ethical one.

Economics can speak only the expected empirical consequences of what would happen under such a plan. The academic literature suggests those consequences are not good. Here was a decent opinion piece, but with cites to several academic articles suggesting the consequences of Obama's plan.

http://www.latimes.com/news/opinion/editorials/la-ed-taxes6-2009may06,0,1859318.story

Posted by Jeff Hoopes | May 7, 2009 12:38 PM ET

Good for Social Services and Public Assets

This tax shift prohibition should provide greater taxation revenues to the Government for social services and public assets.

It is truly amazing how corrupt corporations and indviduals can be when trying to scheme tax avoidance to get away with paying next to no taxes. The rich should bear the burden of the most taxes while the poor should get the most use of public social services needed to expand opportunities for upward socio-economic mobility.

Yet the corporations and the rich hate that since it is a threat.

Posted by David Newman | May 6, 2009 5:08 PM ET

Article Example - Germany

I have used this technique in many international tax-planning structures. The intent was/is not to avoid/reduce/defer US taxation, but to reduce higher than US foreign taxation (in this case German taxation). If the technique was not implemented, the overall tax burned of the German based company would have an effective tax rate higher than the US tax rate - thus creating a higher German cash/tax burden to the global corporation and having no effect on increasing the US tax liabilities - assuming no repatriation. Upon repatriation and in light of the new Obama proposal - the likely scenario will be excess US FTCs, additional tax payments to Germany and nil increase in tax revenues to the US Treasury.

US Treasury must re-think their proposals and work with US corporate tax directors to determine the most prudent approach. The landscape from the old days of aggressive/egregious corporate tax positioning has changed dramatically - US Corporate Tax Directors and Corporations operate in a global environment with changing positions/treaties at each turn - in the most part, business decisions are not made based upon taxation but are certainly considered. If the Tax Director is not afforded the framework to "level" the global tax burden to a range close to US tax rates - he/she must look to alternative legal opportunities within cross boarder transactions that provide such local tax benefits. For the US to penalize US Corporations for implementing allowable tax deferral measures will damage US Corporations competitive positioning in the Global business environment and have minimal (at best) benefit to the purse US Treasury.

Posted by Daniel Potter | May 6, 2009 8:55 AM ET

interest deductibility

Canada is already doing something similar with disallowing interest expense for foreign subsidiaries companies. So, I like the ideas of changing the rules, because it forces companies to change policy around moving income around to lower cost country/tax havens.

I am for a fair system. I would also like to see ways to look at penalizing companies for outsourcing to other countries by looking at the deductibility of these expenses or in some case disallowing the deduction. This would force changes to transfer pricing rules and ensure companies do things properly and pay their share of taxes. This also could mean the end of mgmt fees, etc from holding companies in tax havens like barbados, cayman island and Ireland.

Posted by paul young | May 6, 2009 7:02 AM ET