President Wants to Close Tax Loopholes that Encourage Overseas Investment
During his weekly address on October 16, 2010, President Obama laid out a policy agenda that included closing tax loopholes that encourage companies to invest overseas. He said the U.S. must encourage companies to invest more in the U.S., but the U.S. tax code has encouraged companies to create jobs and profits in other countries.
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The President vowed to close those tax code loopholes, and instead wants to give every U.S. business a tax break so they can write off the cost of all new equipment they buy next year.
Senate’s Attempt to Move New Bill to Close Tax Loopholes Failed in Sept
On September 21, 2010, the Creating American Jobs and Ending Offshoring Act (S. 3816) was introduced in the Senate. S. 3816 would amend the Internal Revenue Code to:
Encourage replacement of foreign with domestic workers. Exempt from employment taxes for a 24-month period those employers who hire a employee who replaces another employee who is not a citizen or permanent resident of the U.S. and who performs similar duties overseas;
End tax loopholes for moving business overseas. Deny any tax deduction, deduction for loss, or tax credit for the cost of an American jobs offshoring transaction (defined as any transaction in which a taxpayer reduces or eliminates the operation of a trade or business in connection with the start-up or expansion of such trade or business outside the U.S.); and
Eliminate tax loophole for certain foreign corporation imports. Eliminate the deferral of tax on income of a controlled foreign corporation attributable to property imported into the U.S. by such corporation or a related person, except for property exported before substantial use in the U.S. and for agricultural commodities not grown in the U.S. in commercially marketable quantities.
The Senate’s consideration of S. 3816 stalled on September 30, 2010 when the Senate failed to adopt a motion to proceed with S. 3816.
(See ITT’s Online Archives or 09/30/10 news, 10093012, for BP summary of the Senate’s failure to move forward on S. 3816.)
Ways & Means Chair Says a Tax Loophole Bill Could Move Next Year
At a recent press conference, Representative Levin (D), Chairman of the House Ways and Means Committee, expressed doubts that outsourcing/offshoring legislation will be taken up in the lame duck session after the elections. In the Chairman’s opinion, the issue would likely have to be considered next year as part of tax reform.
(See ITT’s Online Archives or 10/08/10 news, 10100827, for BP summary of press conference.)
President also Wants Tax Breaks for Small Business, R&D, Clean Energy Manufacturing
The President also vowed to give tax breaks to U.S. small businesses and manufacturers. He said that he wants to make the research and experimentation tax credit permanent and provide a tax cut for clean energy manufacturing in the U.S.
(See ITT’s Online Archives or 10/18/10 news, 10101841, for previous BP summary on the President’s speech.)