Barack Obama 's International Tax Reform Proposal

But as we noted when we fact checked another of Obama's campaign statements— one from the 2010 midterm elections claiming then-House Republican leader John Boehner supported these deductions — there are no provisions in the tax code that specifically reward companies for building factories overseas or outsourcing jobs. There are, however, provisions that allow companies to avoid paying U.S. taxes on income generated by their foreign subsidiaries, at least until they bring those profits back to the United States. Both the president and legislator say these deferrals can encourage U.S.-based multinational companies to keep their foreign profits abroad and reinvest them in infrastructure overseas.”

With the advancements in the globalization of the economy, corporations are finding more ways to avoid the extraordinary tax rates set in place of The United States Of America. With the loss of revenue from large companies dodging taxes the government must make up for the loss by either raising taxes or changing the tax code. A recent company to avoid american taxes is Johnson Controls, a company that “…would not exist as it is today but for American taxpayers, who paid $80 billion in 2008…”(The Editorial Board). This use of American resources to get through tough times, and run to another county during an economic incline is an act that calls for reform in the American tax system. However congress has not passed any legislation to fix the

With the presidential elections coming up, different tax policies are being debated between the candidates. Whether it is proposed by a Democratic or a Republican presidential candidate, there have been many possible solutions presented on how to reform the current tax code. Focusing specifically on four candidates, two from the Democratic Party, and two from the Republican Party, I will compare and contrast their respective tax proposals. While the Democratic candidates generally agree with President Obama’s current tax code, all four candidates are looking to reform it in some way in order to, in their own eyes, better the current tax code affecting today’s citizens.

This article by Mathew Yglesias is about the up and coming tax reform the Republican party is trying to promote and pass before the years end. It explains how this affects businesses, upper, middle, and lower classes of individuals to. It defines tax reform and gives examples of how it could affect everyone. It talks about what good can come from the proposed reform and describes the Senate ‘Byrd Rule” in somewhat generic terms for understanding. Throughout the article both sides are represented in what they want in the new reform bill and gives a brief list of what Republicans are trying to push through the Senate. It supplies a table of how much the government receives now and how the cuts effect certain programs. It gives a brief history

However, the companies only have to pay the U.S. tax for foreign revenues once they bring the profits back to the United States. As a result of these current tax laws, U.S. companies that seek to avoid high corporate tax rates hold their foreign earned profits overseas. “It just makes no sense to pay a substantial tax on it,” said Joseph Kennedy, a senior fellow at the Information Technology and Innovation Foundation (Rubin, R.). It is far too easy for an IT corporation to create a patent in a foreign country and direct revenue to a corporation within that country, thus avoiding the much higher U.S. tax rates. According to Joint Committee on Taxation estimates, the lost revenue is increasing over time as corporations find even more creative ways to make their U.S. profits look like offshore income (Richards, K., & Craig, J.). As result, multinational American corporations have as much as $2 trillion held in overseas subsidiaries and if brought into the United States with the current tax laws, the federal government could benefit by nearly $50 billion per year.

Throughout years large American industrial companies have been running away from U.S. taxes, but there has been a new change. Companies such as Apple and Google have been affected by a change foreign countries are going through collecting higher taxes than before. It seems as if no longer can these companies get away with paying low taxes. This is happening because the European Commission have passed an order to collect high taxes. One example is Ireland who was ordered to collect fourteen billion dollars from Apple, which brought a surprise to this company. Companies have run out of places to run and pay one percent or less of taxes in foreign places, instead of paying back home.

The main objective of many companies is to minimize their tax obligations. Jeffers (2014) discussed the reason of why companies adopt tax inversion strategies. The researcher indicated that the income maximization is a major reason of companies attempting to reduce their tax liability (pp. 100-101). Tax inversion strategies provide companies an advantage to lower income tax rate. Today, U.S. corporations renounce its U.S. citizenship and move to low-tax countries. Companies that reincorporate oversees are not obligated to pay U.S. taxes on earning income (p. 99). Many countries implement tax competition strategies to attract and retain businesses. Well-known companies, such as Exxon Mobil, Hewlett Packard, Tyco, General Electric, PepsiCo, etc. take benefits of tax shelter opportunities overseas (p. 102). Other benefits of the jurisdiction abroad are flexible banking laws and simplified litigation processes.

“The United States has the highest corporate tax rate of the 34 developed, free-market nations that make up the Organization for Economic Cooperation and Development (OECD). The marginal corporate tax rate in the United States is 35% at the federal level… according to the 2013 OECD Tax Database. The global average is much lower, at 25%” (Fontinelle, 2014). Even though there are ways for businesses to decrease or even avoid these payments, this high figure deters foreign investors from considering the United States for business and sends them looking in more favorable countries like Canada or Ireland. Adding to pushing away potential foreign investors, U.S. firms flee to those tax favorable places to avoid it. “When these companies move their headquarters or create foreign subsidiaries, jobs and profits move overseas” (Fontinelle,

With possibly the last changes to the tax law through President Obama’s term, Congress agrees on making many of the “Tax Extenders” permanent. These so-called “Tax Extenders” are tax provisions that Congress has passed over the past few years with short-term expiration dates, at which point the provision would lapse. Typically, after the provision lapsed, Congress would retroactively reinstate the provisions, thus extending its life through the current tax year. This has led to some tax planners relying on the hopes that Congress will reinstate these provisions, without the explicit knowledge that they would do so. Therefore, the now permanent provisions (those that have been extended without a set expiration date) are able to give tax planning professionals more certainty in their projections. The act made several changes to Section 529 Plans alongside with these “extenders”. The chart below briefly summarizes the new tax law changes from the PATH Act of 2015 that most closely affect individuals and small businesses. It should be noted that this does not encompass all aspects of the act, as there are several changes that apply to larger corporations, IRS reform, and the prevention of fraud and abuse.

Looking into Clinton’s plan and how it would evolve over the next five years, the themes of access and affordability shine through. She believes that all students should be able to obtain a public post-secondary education (Clinton on the Issues: College, 2016). The current truth is that “access and success in higher education continue to be stratified according to income…” (Eckel & King, 2004). With Clinton’s plan access would increase, and with that enrollment would increase. Increased enrollment at college campuses strikes as an initially positive thought; more students can gain and education and contribute that education to bettering society. However, increase enrollment could lead to increase selectivity, if enrollment increased in extreme enough amounts. State schools, that were founded to offer quality education would now have a larger pool of student to pick from. For the state school’s fortunate enough to the capacity to educate more student’s their success would continue to increase. But what about the state schools that are already struggling with enrollment issues? Will they continue to live out their mission and increase enrollment at the expense of the student’s education quality. For campuses that are already filled with students, larger incoming classes would lead to less enrollment options, larger classroom sizes, and the same campus resources spread thinner across a larger student body. Schools in this category would be forced to decide between decreasing

In a world filled with economic turmoil, one might look at a loaf of bread today at the grocery store and wonder if it will cost the same tomorrow. The inflation factor has driven prices of food, energy and many other life essentials to an all-time high. In countries like America where the national debt has soared into the double digit trillions. It becomes a question in the minds of many, “how will we ever pay this money back?” This is a question of great magnitude and many factors decide if, and how it is possible. On a much smaller scale, the average household in America lives within a budget to manage income to debt ratio. This budget allows for the necessities to be purchased while allocating a set amount for debt obligations. When there is not enough money for required expenditures, adjustments must be made to compensate. This type of adjustment is comparable to the adjustments that must be made by the American government to allow the debt ceiling to be lowered, while still making financial obligations for consumer families affordable and manageable. This concept is often referred to as tax reform, and it is the only way America will regain strong financial standing as a country.

The American Jobs Creation Act of 2004 decreased the tax liability for foreign earnings repatriated into the United States. This one time decrease lowered the maximum tax rate for overseas profit from 35 percent to 5.25 percent. However, due to foreign tax credits, the average tax rate corporations actually paid was 3.7 percent. The largest two types of corporations to repatriate their foreign earnings were the pharmaceutical and technology sectors. According to a news article written by Lynnley Browning in 2008, “the tax break gave each company claiming it an average $370 million in tax deductions” (Browning 2008). During 2004 the number of United States Corporations with foreign subsidiaries totaled around 9700. As stated above only 843 corporations participated in the Repatriation Tax Holiday. Of these 843, over 30 percent of total repatriation is accounted for by the pharmaceutical manufacturers alone. On average these 29 pharmaceutical manufacturers each claimed a tax deduction on overseas profits of $3 billion.

The United States is in a recession; it has been facing some of the worse economic times since the Great Depression in the 1930’s. One option to fix the economy is to change the corporate tax rate. To lower it or to raise it, that is the question economists have been speculating. America's high corporate tax rate and worldwide system of taxation discourages U.S. companies from sending their foreign-source revenue home, which makes U.S. companies defenseless to foreign acquisition from the international opponents (Camp). Corporations and United States citizens have been fighting for a tax reform, which would hopefully help the American economy; either by lowering the corporate tax, or by raising the tax.

The actions of multinational corporations (MNCs), which derive from their morally dubious goals, may be completely legitimate within a capitalist society. One of these actions that will be examined in this essay is the use of tax havens, as a way of avoiding higher tax liability. This paper will utilise the case study of Apple’s tax avoidance, in examining the legitimation of a company’s goal of profit maximisation, a goal that is against the moral/social consensus

What is tax avoidance? Tax avoidance is the utilization of the legal privileges provided to citizen or company of a country by its government. Tax avoidance is the legal right of an individual provided by the government to reduce the tax burden and decrease the level of tax evasion. But why it is problem? Why is big corporate tax issue? It is issue because; a company’s moves its tax home from the U.S. to another country where its taxes will be lower. To accomplish the move, the company merges with a foreign company in order to form a new foreign company. The original American headquarters and most business operations remain in the U.S. Moving company from one country to other frees a company from substantial tax liabilities in the U.S.