At a time when the U.S. government needs more revenue to help close a trillion-dollar a year deficit, large American corporations want to be exempted from paying taxes on overseas corporate profits, which could further worsen the red-ink problem for the U.S. Treasury.

 

The big-business lobby in Washington is pressuring Congress to repeal the current system that requires U.S. corporations to pay taxes on earnings made in foreign countries, and replace it with what is known as “territorial taxation,” in which they only have to pay U.S. taxes on business they perform within the United States.

 

Under current law, corporations are supposed to pay a 35% rate on foreign profits. But they rarely do, by keeping their monies parked in overseas accounts.

 

It is estimated that $1.5 trillion in profits is residing outside the U.S., avoiding taxation. Businesses want to bring this money home, but not if they have to pay any taxes on it.

 

The Obama administration is reportedly considering a limited version of territorial taxation, according to The Wall Street Journal.

-Noel Brinkerhoff

 

Fight Brewing over U.S. Offshore Profit Taxation (by Kevin Drawbaugh, Reuters)

Big Corporations Claim a Tax Holiday on Foreign Earnings Would Create Jobs…Don’t Believe It (by David Wallechinsky, AllGov)