As part of his $4 trillion budget proposal, President Barack Obama is seeking a one-time $238 billion corporate tax on foreign earnings that would, in turn, be used to fund repairs and improvements to roads, bridges, transit systems, and freight networks.
A Reuters story on Sunday says Obama’s proposal calls for a one-time 14% tax on roughly $2.1 trillion in profits earned over the years by U.S.-based multinational companies that have not repatriated the income.
This “would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely,” a White House official told Reuters.
The president also wants to impose a 19% tax on U.S. companies’ future foreign earnings, while they could still get tax credits for foreign taxes paid, Reuters says. Any income repatriated after that would not be taxed again. Obama is also calling for a crack down on tax haven use and “inversion” deals in which multinationals reincorporate in foreign countries to avoid paying U.S. taxes.
The tax proposals were met by Republican resistance, according to Reuters, which cited House Ways and Means Committee chair Paul Ryan’s comment Sunday on NBC’s “Meet the Press — “What I think the president is trying to do here is to, again, exploit envy economics.”
However, Republicans are open to working with Obama and Congressional Democrats on corporate tax reform, Reuters says. Ryan aide Brendan Buck told the news service that any measures should focus on simplifying the code and lowering rates, instead of pegging new taxes to infrastructure spending.
“If that’s the approach the administration is willing to take, there may be room to find common ground,” Buck told Reuters. “There won’t be, however, if the president instead tries to sock American businesses with big tax hikes just to increase spending and add even more complexity to the code.”