When Senator Barack Obama was a candidate for president his consistently loudest applause line was, "We've got to stop rewarding companies with tax breaks for taking American jobs and shipping them overseas." Today, May 4, President Barack Obama began the fight to make that sentiment policy. He faces daunting odds. Whether he succeeds will provide the clearest picture yet of whether the new president and his party have the guts to make truly difficult change or whether, when it comes down to it, business as usual still has the upper hand in D.C.
You can see Margaret Talev's report on Obama's White House announcement for McClatchy here. "I want to see our companies remain the most competitive in the world," Obama said. "But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring jobs to overseas tax havens."
To accomplish this Obama wants congress to end the "check the box" rules that let U.S. companies set up shell subsidiaries in tax havens such as Bermuda to avoid paying taxes. He wants to eliminate the loophole that allows firms to avoid taxes on overseas profits if the profits are kept overseas but taxes them if they re-enter the U.S. He also requested giving the IRS legal authority to get more information from foreign bank accounts to fully track money trails. And he wants congress to approve the hiring of 800 new IRS agents to enforce the rules. Obama feels an additional $210 billion can be collected over the next 10 years if his plan is adopted.
To illustrate the level of abuse, the White House says the "effective U.S. tax rate on U.S. multinational corporations as of 2004, the most recent year of data, was 2.3%." Eighty-three of the one hundred largest U.S. corporations had subsidiaries in tax havens. Bermuda, the Netherlands and Ireland, all low-tax countries, accounted for a ridiculous one-third of all foreign profits claimed by U.S. multinationals.
U.S. Chamber of Commerce spokesman Marty Regalia predicted wreck and ruin. Longtime Republican corporate shills like Senate Minority Leader Mitch McConnell charged the plan with giving "preferential treatment to foreign companies." Business giants including Microsoft, DuPont, General Electric and Eli Lilly and "more than 200 companies and trade associations have gone on record in opposition to the move since March."
Opposition from these usual quarters is expected, of course. What remains to be learned is whether a popular president who campaigned on the issue and gained the enthusiastic support of the electorate for it, and his ostensibly progressive congressional majorities can prevail against the money, media blitz and right-wing talking head offensive that will soon be unleashed against the principle that corporate entities should pay their fair share. We shall see. If Obama and the true congressional populists can indeed pass a bill that means anything in the face of such powerful forces I will be impressed--and surprised.
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