14% Tax Proposed By Obama On Foreign Profits
FoxNews reports: Today, Obama will present a 4 trillion dollar spending plan to the Congress. The plan includes billions of American dollars for public works. The idea in general has the support, but the tax increases to back it up, does not.
A 6-year public-works program, worth 478 billion, will be proposed by the President to fund bridge, transit and highway upgrades. Half of the money should come from a 14% tax increase on overseas profits, which would be paid immediately.
The law right now requires for taxes to be paid only when the profits are returned to the states, this is why most companies prefer to leave their earnings overseas.
The whole tax plan is meant to aid the middle class by increasing taxes for the highest earners of the country.
Ever since some elements from Obama’s plan were revealed, the Congress has been less than supportive of it. Some of the congressmen believe that this kind of new taxes will only encourage envy economics and would not work as intended.
There are several tax increases and spending programs in the budget proposal which have been dismissed by the Congress.
A similar idea was proposed a year ago by Dave Camp, the former House Ways and Means chairman, but his plan didn’t make it to the Congress.
Today, companies don’t bring their overseas profits back to the US because of the high 35% tax. This means a loss for the country as this money will never be invested here.
According to Obama’s proposal, US earned company profits would go down to 28% and overseas profits would incur a 14% tax (which would increase to be 19% later).
Most businesses and companies in the US do not support this taxing method and prefer the more common “territorial” system.
An alternative way to increase the Highway Trust Fund would be to increase gasoline tax – an idea that the President doesn’t agree with.