Obama seeks to close tax loopholes
President Obama on Monday laid out his proposal to raise billions of dollars through cracking down on tax code loopholes that allow individuals and companies to maneuver around paying taxes by using offshore tax havens.
Obama said these reforms would raise $210 billion over the next 10 years.
“Nobody likes paying taxes, particularly in times of economic stress, but most Americans meet the responsibility because they understand it’s an obligation of citizenship,” Obama said. “And yet, even as most American citizens and businesses meet this responsibility there are several that shirk” it.
At its root, Obama’s plan is twofold. First, the proposal calls for eliminating tax advantages for creating jobs overseas and replacing them with tax incentives for creating domestic jobs. By removing those tax incentives, the government will raise $103.1 billion in the next 10 years, the White House says, which it will invest in research and innovation in the U.S.
Obama said companies use that loophole to claim deductions on jobs created overseas on their tax returns without paying taxes on the profits they reap from that labor.
Second, Obama is seeking to crack down on the use of offshore tax havens that aren’t subject to U.S. tax laws. By eliminating offshore subsidies and cracking down on individuals who abuse these tax havens, the White House predicts it will raise $95.2 billion over the next 10 years.
Before Obama spoke, Treasury Secretary Timothy Geithner said the reforms are “common sense changes” and a “step in creating a fairer tax code and a more productive American economy.”
Obama stressed that reforming the tax code to make it more fair was something that he talked about on the campaign trail last year and something that Democrats have discussed “for years.” These reforms, he said, are a “downpayment on the larger tax reform we need to make.”
“With these steps I am announcing today,” the president said, “we are beginning to crack down on [those] that are bending the rules.”
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