President Barack Obama recently proposed to withdraw a rule that allows corporations, which have subsidiaries outside of the country, to avoid paying taxes on income. The check the box rules were created by former President Bill Clinton’s administration and written into law by congress after Clinton tried to have it withdrawn. The check the box rules were intended to help American corporations reduce paperwork. Since the rules went into effect companies have used them as a loop hole to hide income in tax havens overseas. Obama’s overhaul of the tax policy could help raise an extra $210 billion dollars in tax revenues for the government in the next ten years.
Opponents of the proposal say this will be really hard on corporations that already have to pay a high tax rate compared to countries like Ireland were corporations are flourishing. The say that if corporations had a lower tax rate companies would be more likely to move to the U.S and bring jobs to Americans and keep their income in the U.S. They also say if corporations have to pay these taxes it will give them an unfair disadvantage in the global marketplace. All of this may be true but it is not faire that corporations residing only in the U.S. should have to pay more taxes then companies that are sending jobs overseas. If it will help our economy to have lower taxes for corporations then we should lower taxes, but I don’t think companies should have the ability to weasel around paying their income taxes.
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soap-boxing
ReplyDeleteThis is a great article not only for Check the box rules but also for out sourcing. I think to achieve maximum results in both theaters we could lower domestic taxes on industry while levying taxes opposed to outsourcing thereby creating a very attractive model for domestic business. Outsourcing over the last decade has been mainly in telecommunication industries along with several other technology based businesses. why this is a problem is that these clean industries pump millions of dollars into economies where they are located along with stimulating other industries around them. I think outsourcing and the tax revenue involved is a major issue that our political leaders should address.
I agree with both Soapboxing and Allen Craig. Something has got to be done in order to reduce the amount of outsourcing and ensure that corportations are paying their fair share of taxes while making sure that the tax is,well...fair. Both of these problems could be solved by the proposed national sales tax. Although the proposal as it currently stands has a few kinks to work out, it seems as though it would level the playing field and provide for a more fair way to tax both individuals and coporations.This would make America more attractive to foreign corporations ot outsource their services here.
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