President Barack Obama plans changes to tax policy certain to be unpopular with corporations with international divisions and individuals who use tax havens. Obama’s two-part plan, which he is slated to unveil at the White House today, also calls for 800 new federal tax agents to enforce the system. The president’s proposal would eliminate some tax deductions for companies that earn profits in countries with low tax rates, as well as consider U.S. citizens who use tax havens in the Bahamas or Cayman Islands guilty of violating U.S. tax laws. If Obama wins congressional approval for the changes—and he faces a challenge on Capitol Hill — it could deliver $210 billion in tax revenue over the next decade. Treasury Secretary Timothy Geithner was to join Obama for the announcement.
Officials described the administration’s plan ahead of the announcement on the condition of anonymity so they wouldn’t upstage the president’s remarks. However, they acknowledged the political challenges facing the plan. The administration won’t seek a complete repeal of overseas tax benefits and, although the rule changes are narrower than some anticipated, business leaders still oppose them as a tax hike. Obama aides countered that the plan is a step toward a massive overhaul of international financial regulations the president has promised.
