Friday, February 27, 2009

Obama on tax warpath

This latest story from tax-news.com, suggests good progress.

"United States President Barack Obama has made good on his promise to crack down on corporate tax avoidance by proposing in his budget for 2010 a tough new enforcement campaign directed at taxes owed both domestically and abroad. The budget also includes an increase in funding for the IRS as the new administration sets about closing all those loopholes that it believes allow multinationals to play fast and loose with the US tax code and deplete the Treasury's coffers."


Sounds good. Here's some interesting background:

"Internal Revenue Service Commissioner Doug Shulman said US-based corporations more than tripled their foreign profits between 1994 and 2004, rising from USD89bn to USD298bn, with 58% of that profit earned in low tax or no tax jurisdictions."

And this:

"Meanwhile, multinational enterprises increased from 3,000 in 1990 to more than 63,000 in 2007 and the value of foreign tax credits being claimed increased by more than 25% in just two years from 2005 to 2007."

A last word from the New York Times. First, some specifics:

"To combat deficits, Mr. Obama proposes to let Mr. Bush’s high-end tax cuts expire in 2011, raising the top rate from 35 percent to as high as 39.6 percent. He would also impose a 20 percent rate on investment income, up from the current super-low 15 percent. And he would reinstate a tax provision enacted by the first President Bush, but undone by his son, that limited tax write-offs by high-income taxpayers for dependents and other expenses, like mortgage interest on vacation homes.

The proposal also calls for taxing private equity partners just like the rest of us (TJN: bravo!). Under current law, multimillionaire buyout mavens pay tax on much of their income at about the lowest rates in the tax code. Under the Obama budget, their earnings would lose favored status and be taxed as the ordinary income of ordinary mortals."

And finally:

"President Obama’s first budget recognizes what most of Washington has been too scared or ideologically blind to admit: to recover from George W. Bush’s reckless economic policies, taxes must go up."

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