In what will be a test of his ability to stave off powerful lobbies, President Obama will go after offshore tax havens used by corporations. Originally established to ease a double tax burden for companies that set up operations overseas, the tax laws have provided havens for corporate avoidance of their fair share.
The top corporate tax rate is 35 percent, but the U.S. Treasury Department estimated that in 2004, the most recent year for which data is available, American multinationals paid $16 billion in taxes on $700 billion in foreign income — an effective rate of 2.3 percent. Oh, snap – I can just hear the whining of the corporations about how much they pay in taxes.
Of course, the corporations have the right to set up business anywhere they believe they can exploit the local economy and environment. That isn’t going to change, but if that is what they want to do, then there is a price to pay.
The proposals would especially hit pharmaceutical, technology, financial and consumer goods companies — among them Goldman Sachs, Microsoft, Pfizer, and Gamble Company – that have major overseas operations or subsidiaries in tax havens like the Cayman Islands.
Here is my take – too bad. Move your company business overseas, taking American jobs, and you deserve to pay double taxes. I am sure the lobbying efforts of the corporations; however, will result in tempering President Obama’s efforts to plug the tax haven loophole.
Map of tax havens
Image credit: Google Images and Transnationale.org