This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-31085912
The article has changed 3 times. There is an RSS feed of changes available.
Version 1 | Version 2 |
---|---|
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 20 hours 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 would 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 would be used to fund road projects in the US. | |
But analysts say it is unlikely the Republican-controlled Congress will approve the proposals. | |
Mr Obama told broadcaster NBC that despite several years of economic improvement, wages and incomes for middle class families were "just now ticking up". | |
"They haven't been keeping pace over the last 30 years compared to, you know, corporate profits and what's happening to folks in the very top," he said. | |
Research firm Audit Analytics calculated last April that US firms in total had $2.1tn-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. | 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 US. | |
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 $2tn 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%. | The tax rate is far lower than the current US top corporate tax rate of 35%. |
Also expected in Mr Obama's budget proposal is a tax cut on earned incomes, including tax credits for child care and "second earners". | |
Mr Obama will also seek to ease restrictions on military and domestic spending in place since a budget deal in 2011. | |
Republicans in Congress have largely rejected many of Mr Obama's proposals for increased domestic spending and tax rises on corporations but support increased military spending. | |
Representative Paul Ryan, the Republican's top budget official, accused Mr Obama of exploiting "envy economics" in his proposal. | |
"This top down redistribution doesn't work," Mr Ryan told NBC. |