Obama bids to stop multinationals from avoiding tax

Proposals to raise hundreds of billions of dollars from US multinational corporations that avert tax on income held overseas forms a key part of US President Barack Obama’s latest budget proposals.

Obama seeks to raise about $157bn (€120bn) over a decade with these measures which could impact US companies operating in Ireland, up about $10bn from last year’s budget.

And the president has backed cutting the top US corporate tax rate to 28% from 35%, now the highest in the industrialised world.

Obama yesterday revived a list of his favourite ideas for raising $580bn (€442bn) in new US tax revenues over 10 years from the wealthy that, while unpopular in Congress, could prove an opening gambit for a longer term tax overhaul.

While certain to not move forward en masse, some elements of the 2014 budget blueprint, including proposals to stop big corporations from skirting tax on foreign income, could gain traction as lawmakers consider a revamp of the tax code and face a deadline on the government’s debt limit this summer.

“These are all opening bids in any potential grand bargain, so from that perspective they are important,” said Chris Krueger, an analyst at Guggenheim Partners.

Obama’s budget does not seek to raise individual tax rates as he has proposed in prior budgets, according to a White House document. For years, he sought to raise rates on household income above $250,000.

The bid revives Obama’s offer last year to Republican House of Representatives Speaker John Boehner during the negotiations to avoid the so-called fiscal cliff of looming tax hikes and spending cuts.

Obama’s proposal officially puts forward the idea of a new “Buffett tax,” named for investor Warren Buffett, that phases in a minimum 30% tax rate on household income above $1m.

Obama also sought more revenue than last year from curbing energy tax breaks, and proposed ending a tax advantage for corporate jets.

— Reuters