Republican lawmakers are doing something surprising with President Barack Obama’s proposal to tax U.S. companies’ overseas profits. They’re calling it constructive.
As Bloomberg reports, top members of the committees focused on taxes in Congress say they see Obama’s latest plan as a place to start negotiations toward a revamped business tax system that would lower rates, remove breaks and make it easier for companies to bring home their foreign profits.
“They seem to be moving in the right direction,” says Rep. Charles Boustany, who represents Louisiana’s 3rd Congressional District. “We have an opening to test their intent on reform, so we’ll work to put proposals forward and see if they’re willing to bite on it.”
After years of stalemate on revamping the tax code, lawmakers say they need to move quickly to explore a possible deal before momentum fades and the 2016 presidential election takes attention away.
Obama’s latest business proposal centers on international taxes paid by U.S.-based companies. Under current law, such firms owe the full U.S. tax rate—35%—on profits they earn around the world. They get credits for foreign taxes paid and can defer the U.S. tax until they bring home the money.
That system gives companies an incentive to shift profits to low-tax countries and leave them there. That’s exactly what companies, including Apple and Google, have been doing, stockpiling about $2 trillion in offshore profits.
Business groups and Republicans in Congress have been advocating what’s known as a territorial tax system, in which companies can repatriate foreign profits without an extra layer of U.S. taxation.
The plan included in Obama’s budget resembles a territorial system. Companies could bring home profits they earn around the world and use them however they want. Read the full story.
