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| Obama plans tax on US firms overseas to fix roads at home | Obama plans tax on US firms overseas to fix roads at home |
| (about 1 hour later) | |
| US President Barack Obama plans to close a tax loophole that allows US firms to avoid paying taxes on overseas profits, the White House says. | US President Barack Obama plans to close a tax loophole that allows US firms to avoid paying taxes on overseas profits, the White House says. |
| His 2016 budget will impose a one-off 14% tax on US profits stashed overseas, as well as a 19% tax on any future profits as they are earned. | His 2016 budget will impose a one-off 14% tax on US profits stashed overseas, as well as a 19% tax on any future profits as they are earned. |
| The $238bn (£158bn) raised will be used to fund road projects in the US. | The $238bn (£158bn) raised will be used to fund road projects in the US. |
| The proposal is one of the main components of Mr Obama's latest budget, due to be presented on Monday. | The proposal is one of the main components of Mr Obama's latest budget, due to be presented on Monday. |
| The spending plan, including the proposal on overseas profits, would require approval from the Republican-controlled Congress to be made law, something seen as unlikely. | The spending plan, including the proposal on overseas profits, would require approval from the Republican-controlled Congress to be made law, something seen as unlikely. |
| Research firm Audit Analytics calculated last April that US firms in total have $2.1 trillion-worth of profits stashed abroad. | |
| It found US conglomerate General Electric had the most profit stored overseas at $110bn. Tech giants Microsoft and Apple and drugs companies Pfizer and Merck all featured in the top five. | |
| No tax is currently due on foreign profits as long as they are not brought into the United States. | No tax is currently due on foreign profits as long as they are not brought into the United States. |
| As a result some companies put their earnings in low tax jurisdictions and simply leave them there. | As a result some companies put their earnings in low tax jurisdictions and simply leave them there. |
| The White House said its plans for an immediate 14% tax would raise $238bn, which would be used to fund a wider $478bn public works programme of road, bridge and public transport upgrades. | The White House said its plans for an immediate 14% tax would raise $238bn, which would be used to fund a wider $478bn public works programme of road, bridge and public transport upgrades. |
| "This transition tax would mean that companies have to pay US tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any US tax indefinitely," a White House official said. | "This transition tax would mean that companies have to pay US tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any US tax indefinitely," a White House official said. |
| The official said that after this one-off tax, the 19% permanent tax firms would have to pay on overseas profits "would level the playing field, and encourage firms to create jobs here at home." | The official said that after this one-off tax, the 19% permanent tax firms would have to pay on overseas profits "would level the playing field, and encourage firms to create jobs here at home." |
| The tax rate is far lower than the current US top corporate tax rate of 35%. |