The war on corporate America by Obama continues – Obama plans corporate tax crackdown

Basically Obama is planning on eliminating or heavily reducing a tax deferment on companies that reinvest their international profits in overseas operations. He also plans to extend an R/D tax incentive. As well, he plans on seeking out the taxable incomes of people moving money to tax havens overseas. UBS (a well known Swiss bank) has already paid nearly $1 billion in penalties for knowingly hiding US money, and is being sued by the US for civil penalties by hiding the income of over 50,000 US citizens.

What do you bet the Clinton’s stash of money in the Cayman’s will be exempted?

So now the companies will spin off their oversea operations, and the profits. Issue shares in the new companies in a non-taxable event. And say goodbye to the jobs and profits completely from the standpoint of the US Corporation. The Stockholders won’t lose because they get the stock of the spin-off. But the US Corporation loses the asset and its profits, making the remaining US corporate HQ look like an expense, instead of a profit center, located in a high corporate tax environment. Sounds like a reciepe for the closure of the US Corporate HQ and relocation to a Corporate Tax haven.

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May 4, 2009 · Filed Under Taxes


Comments

  • King

    If these companies did spinoff their foreign operations it would still increase tax revenues for the U.S. as currently companies are able to use domestic money on foreign expenses, this allows for lower profits in the U.S. and higher profits in tax havens. If spun-off these foreign companies would need to pay for all their own expenses as they would no longer part of the American company. This would increase revenues in the domestic parent company and the spun-off companies would see a decrease in profit. Thus these companies would then pay more tax in the U.S.