Obama is receiving resistance, even from his own party on his new proposal to close corporate tax “loopholes” for American companies operating internationally. It seems most people can see how ill-conceived his plan really is.

The supposed “loophole” that Obama is trying to close is a law that says that companies that make profits oversees are not taxed in America on those profits since they are already taxed in the country where the profits are made. This prevents them from being double-taxed. What some countries have done is made sure that profits are made in foreign countries where the tax rates are really low. This is the exact same reason so many companies here in the US incorporate in tax friendly states like Nevada.

We have to remember that every “loophole” in the tax code was put in for a reason and are part of the tax code. These laws are to encourage certain behaviors the same way many Americans take advantage of the mortgage interest deduction. There is nothing illegal in using these tax laws to minimize their tax burden just like there is nothing illegal in using the charitable contribution deduction on your personal taxes.

Yet Obama is characterizing these companies as being as bad as tax cheats in order to gain support for his tax hike. That’s exactly what this is. It’s a huge tax hikes on all of our largest and most competitive companies here in the US. The only thing this will do is increase the expenses of companies and make them less competitive with foreign companies. Is that what we really want to do in this economy? Are we trying to improve our economy or destroy it?

I have no doubt that we need to take a closer look at the tax code and simplify it immensely, but let’s wait until things stabilize and recover before we put more companies at a disadvantage.

This entry was posted on May 5, 2009 at 1:13 pm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Posted in Economy by Josh Ferguson No Comments Yet