Is Obama trying to force companies that have international offices leave the US?

Right now, US businesses that operate overseas are allowed to deduct their expenses for their overseas operations on their US tax returns, but they don't have to declare the overseas profits as income or pay US tax on them. Depending on the laws of the overseas countries where they operate, they may have to pay taxes to that country on those profits, however.

Here's an example of how the law currently works:

Two US companies want to build new manufacturing plants. The first company builds their plant in a country with a 15% corporate tax rate. The second company builds the plant in the US.

Since the second company's plant is built in the US, they will pay US corporate tax on the plant's earnings and they will be allowed to deduct the expenses of running that plant from their US tax returns.

The first company, with the overseas plant, doesn't have to pay US tax on the overseas earnings, but they are still allowed to deduct the expenses of running that plant from their US taxes.

That gives companies an incentive to establish their operations abroad, rather than here in the US.

The change that Obama wants would require that if the US companies want to deduct the foreign expenses, they also have to declare the foreign profits and pay US taxes on them.

The companies WILL still be allowed to subtract any foreign income taxes on those profits from whatever US tax is due.

It just means that a US company will not be able to pay less tax by basing their operation abroad. They will have to pay at least as much tax as they would if they were based in the US.

Note, by the way, the US citizens are not accorded the same right. When US citizens live and work abroad they have to declare their entire worldwide income to the IRS and it is subject to US taxation, even if that US citizen lives abroad, works abroad, and never brings the money back to the US. He can't defer taxes simply by keeping it out of the country.

You say, "Under existing laws, companies with operations overseas pay U.S. taxes only if they bring the profits back to the United States."

While that's what the news story says, it is not really true.

Under section 951(a) of the Internal Revenue Code, US companies already have to pay taxes on unrepatriated income if the income is not earned in an active trade or business conducted in the home country of the subsidiary, subject to very complicated rules in sections 954-959 of the Internal Revenue Code. It's been that way since 1962.

The new rules DO NOT say "you owe taxes for ALL the money you made around the world." They only try to prohibit parking foreign income in countries where it was not earned. If a French subsidiary of P&G manufactures and sells toothpaste in France, the French subsidiary can hold the income. But if the French sub sells toothpaste in France and hands the money off to another P&G subsidiary in the Cayman Islands, THEN it will be treated as repatriated to the U.S.

See the difference?

If they want to be considered a US company and get the benefits from that as well as keep their lobbying rights in Washington, they should be taxed in the US. If they want to be an International co. then they should just be up front about it and not have offices, ties, or influence in the US.

Companies that abuse other country's workers for non-living wages are morally corrupt and are promoting human rights abuse.

If your company benefits from low production costs, especially wages, in other countries, ethically, you should not get any benefits from being considered an American co. That co. would also be shipping our jobs and production ability out of the US.

We don't have any manufacturing base in the US anymore, Obama is trying to encourage businesses to produce here. Loop holes for these corporations are destroying the economic growth of the US for infrastructure and social programs. But if you don't want firetrucks to help you out when your house is on fire, or roads to drive on or schools for kids, I guess we can just give it all a way.

Is there a balance between being a capitalist and a humanist? At What point does making money become morally dysfunctional? How much of the planet and people do you get to hurt or destroy in the name of profit? What limits should companies have and how should they be regulated?

Our world is a LIMITED system, yet we treat it as if it has unlimited resources and we give ourselves no restraint. Unless we begin a dialogue of responsible business practices, we will damage and extract until there is nothing is left, everything is polluted, and the rich live in bubbles protected by Blackwater.

Obama is beginning this dialogue, even though capitalists don't want to hear it. Capitalists have children too, right? So they should be interesting in preserving some of the world for their children. That is my hope.

You shouldn't get to have your cake, eat it and eat everyone elses, too.

They would bring in U.N. soldiers to keep the peace. U.S. soldiers might be among them. The U.S. already have Aircraft Carriers in the general area covering our operations in Iraq and keeping an eye on Iran. Any U.S. involvement will be carefully measured. The big problem will be accommodating the huge numbers of refugees and keeping Hamas from slaughtering them. Israel has Apaches, and it is not inconceivable that other countries and/or the U.N. will provide additional ones for the protection of refugees. [Israel IAF AH-64A "Peten" פתן Apache Longbow at the International Aerospace Exhibition 2006. The Israeli Air Force uses the Apache to strike various targets with guided missiles. The AH-64A attacked and destroyed some of Hezbollah outposts in Lebanon during the 1990s, attacking in many weather conditions — day and night. During the al-Aqsa Intifada, the IAF used the Apaches to kill senior Hamas figures, such as Ahmed Yasin and Adnan al-Ghoul, with guided missiles. In the Israel-Lebanon conflict of July – August 2006, two IAF AH-64A helicopters collided, killing one pilot and wounding three, all critically. In another incident in the conflict, an IAF AH-64D Longbow crashed, killing the two pilots, due to a malfunction in the rotor hub.] At the rate that Israel is taking out Hamas' missiles and ammo dumps, Hamas will be down to small arm soon.

If Obama does not want companies to leave he will need to lower the tax rates it is already the 2nd highest in the world. The credit that Obama is getting rid of only helped to level the playing field.

Steve- the only problem is people try to move up make more money move to better neighborhoods, better schools, and etc. corporations are out to make a profit so they will move to a more tax friendly location if it means more money for the share holders whether that be in the US or Liechtenstein.

Tyco International moved its headquarters to Bermuda a few years back because of U.S. taxes. If Obama tries to execute this plan, we should all buy land in Bermuda.

Obama is an economic idiot. Double taxation is not the way to build America's economy. We already have enough problems competing in a global economy.

I'm sure Obama's plan would allow our companies to take a tax credit for taxes they pay to foreign governments, but that still means higher taxes for them and they won't tolerate that. They'll move.

Yes. Why do you think the germans pulled out of Chrysler ? And don't go there with that happened under Bush; I know that. I speak of the political efforts to do damage to our economy! Those transgress party lines for the sake of pulling more power to Washington.

The adage still holds true "You can have a strong economy, or a strongly regulated economy; but never Both "

They won't leave the U.S. But they should pay higher taxes. They cut jobs in the U.S. and send them overseas for cheaper labor. If they kept jobs or increased jobs in the U.S. while expanding overseas then they deserve a tax break. But none of them do that. Off shoring is killing U.S. jobs.

You've got it backwards.

Why would anyone shut down the store to preserve a tax shelter that doesn't work anymore?

That's stepping over dollars to pick up dimes. Tax shelters SAVE them money, but don't necessarily EARN them any.

I'd like to think that he wouldn't want to do that. But it appears that his policy is aimed at doing just that.

If I were P&G, or any company with corporate offices in the US, I'd have to consider how this will impact my company. If I'm competing with an overseas firm, I would want to do as best I could, but if I were hamstrung by new tax laws that make having corporate offices in America unattractive, I would seriously consider moving to save my company.