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President Obama puts 2009 Global Tax Plan into aciton: Republicans scramble desperately to stop it
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Democrats move one step closer to reforming international tax laws, as President Barack Obama took center stage to discuss how the bill would strengthen the economy, while conservatives argued new changes in tax policy can only hurt American businesses and citizens by making them poorer.
A panel of Economists and tax experts held an open debate at the Cato Institute recently to discuss tax competition, and to also contest President Obama’s plea to change the existing international tax policies. In short, conservatives argued that the bill would prevent citizens from reaching their fullest financial potential, as well as prevent them from experiencing the American dream.
On May 04, 2009 in the Grand Foyer of the White House, President Barack Obama explained that the revised international tax laws would place stricter provisions on foreign tax credits, limit overseas tax deferral subsidy profits on U.S. businesses, and allow the IRS to collect more information about offshore accounts by requiring overseas banks to submit 1099s for American account holders.
It has been five months since President Obama announced publicly his plans to reform the U.S. international tax laws, which conservatives believe not only change the U.S. tax code significantly, but also infringes upon their right to financial privacy, as well as hinder tax competition among U.S. companies.
“Tax competition brings great benefits to all society and not just to those who directly take advantage of it,” explained one Cato panelist, Richard Teather, a senior lecturer in Tax Law at Bournemouth University. “Tax competition is the use by governments of low effective tax rates to attract capital and business activity to their country.”
President Obama acknowledges the fact that the wealth of our nation relies heavily upon the growth of American businesses, but admits more need to be done to diminish the abuse of tax heavens.
“Nobody likes paying taxes, particularly in times of economic stress,” President Obama said. “But most Americans meet their responsibilities because they understand that it's an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being. And yet, even as most American citizens and businesses meet these responsibilities, there are others who are shirking theirs,” which the White House transcript noted.
Obama explained, “Now, I understand, one of the strengths of our economy is the global reach of our businesses. And, I want to see our companies remain the most competitive in the world. But, the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens,” which the White House transcript revealed.
“Global economic growth and personal freedom are under attack by governments and international organizations seeking to squelch financial privacy and tax competition,” explained Cato panelists Richard Rahn, an adjunct scholar and Veronique de Rugy, a policy analyst at the Cato Institute. “High taxes on capital create an increasing drag on growth as capital mobility increases. Opposition to international tax competition is wrapped in the language of economics, but seems to stem mainly from political concerns.”
Rahn and Rugy argued, “Privacy rights and internal tax competition are beneficial constraints on the monopoly power of governments. But high tax nations and organizations, such as the European Union are pressing for international agreements to remove those limits on government power at the expense of prosperity and freedom.” Yet, there are others who view this in a different light.
The Organization for Economic Co-operation and Development (OECD) released a press statement earlier this year stating, “Competitive forces have encouraged countries to make their tax systems more attractive to investors. However, some tax practices are anti-competitive and undermine fair competition and public confidence in tax systems. OECD and non-OECD economies are working together through the Global Forum to address harmful tax practices by improving transparency and establishing effective exchange of information.”
It is believed that the federal tax gap is attributed to offshore tax abuse, which approximately incurs a $100 billion per year, says Carl Levin (MI-D), in a press release written February 20, 2009.
To view the federal annual tax gap report, please visit
http://www.bararckobama.com/pdf/taxes/Factsheet_Tax_Plan_FINAL.pdf.
President Obama believes the new tax revisions would save American taxpayers $210 billion over a period of ten years, reduce the deficit, provide relief for American working families, as well as cut taxes for legitimate businesses, which the White House transcript notes.
“We're putting a middle class tax cut in the pockets of 95 percent of working families, and we're providing a $2,500 annual tax credit to put the dream of a college degree or advanced training within the reach for more students," President Obama explained. “We're providing a tax credit worth up to $8,000 for first-time home buyers to help more Americans own a piece of the American Dream and to strengthen the housing market, according to the White House, Office of the Press Secretary. international tax law revisions are not expected to go into effect, until 2011.
To view a related video (Trailer) about the state of the nation’s economy, please click this link, http://www.youtube.com/watch?v=HBo2xQIWHiM
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