President Barack Obama is seeking new taxes on trillions of dollars in profits accumulated overseas by American companies.
The plan, outlined in his 2016 fiscal budget, includes a new approach to taxing foreign profits in the future, Reuters reported Monday.
Obama is targeting corporate tax avoidance by plugging loopholes that allow companies to pay no tax on earnings held abroad.
However, the proposal is facing stiff resistance from Republicans.
Obama will call for a one-time, 14 percent tax on an estimated US$2.1 trillion in profits piled up abroad over the years by multinationals such as General Electric, Microsoft, Pfizer Inc. and Apple Inc.
He will also seek to impose a 19 percent tax on US future foreign earnings of companies.
At present, those earnings are supposed to be taxed at a 35 percent rate but many companies avoid that through the loophole that defers taxation on active income that is not brought into the United States, or repatriated.
The US$238 billion raised from the one-time tax would fund repairs and improvements to roads, bridges, transit systems and freight networks that would replenish the Highway Trust Fund as part of a US$478 billion package, the White House said.
The annual budget proposal is as much a political document as a fiscal roadmap, requiring approval from Congress.
Given Washington’s current political division, much of what will be laid out on Monday is unlikely to become law.
Obama’s budget will set a spending target of US$4 trillion for fiscal year 2016, including a US$474 billion deficit, 2.5 percent of gross domestic product, according to The New York Times.
The budget also includes US$105 million for “trade adjustment assistance” to help workers who have been affected by free trade pacts, it said.
Obama’s latest tax proposals are part of a broad tax reform package that he says is meant to help middle-income Americans.
“What I think the president is trying to do here is to, again, exploit envy economics,” said Paul Ryan, the top Republican tax writer in the House of Representatives, on NBC’s Meet the Press.
Republicans, who took control of the Senate and boosted their House majority after November’s congressional elections, have said tax reform is one area where they hope to find compromises with Democrats and the White House, although Obama’s proposals have so far received a lukewarm reception.
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