Reuters top ten news stories delivered to your inbox each day.
You are here:
Business & Finance
The Great Debate
Do More With Reuters
Make Reuters My Homepage
Support (Customer Zone)
About Thomson Reuters
Tech cos enlist Democrat to blast Obama tax plan
Mon Jun 8, 2009 2:03pm EDT
Email | Print |
| Reprints | Single Page
By Kim Dixon
WASHINGTON (Reuters) - A group of technology heavyweights, including chiefs of IBM (IBM.N) and Motorola Inc (MOT.N) enlisted a former Clinton administration economist to beat back President Barack Obama's plan to boost some taxes on overseas profits.
The Technology CEO Council recruited Robert J. Shapiro, a former top Commerce Department official, who wrote a report released on Monday arguing that significant jobs losses could occur under Obama's plan.
Last month, Obama introduced a proposal to raise $210 billion over a decade in part by tightening tax rules on income earned abroad. The administration says current policy spurs job creation overseas, while U.S.-based multinational companies say precisely the opposite is true.
Shapiro acknowledged his job loss estimates don't correspond to Obama's proposal, because the report examines elimination of tax deferral of foreign income, while Obama's plan is a modified version of that.
"The direction of the effect is very clear: it would significantly reduce the effective post tax earnings from foreign operations and in so doing would have these so-called adverse effects," which include job losses in the United States, Shapiro told Reuters.
A respected economist who reviewed the report, however, questioned the underlying data assumptions cited.
"Their numbers are just way out there," said Rosanne Altshuler, an economist at the Brookings-Urban Institute's Tax Policy Institute.
For example, the Shapiro report estimates that repeal of deferral would have cut earnings at foreign subsidiaries of U.S. multinationals by $57.2 billion in 2004.
But the congressional Joint Committee on Taxation estimates that the government has raised a fraction of that on annual basis from the policy, making that estimate seem inflated.
Current law allows companies to defer income tax until they bring the income back into the United States, for example, in the form of dividends.
Companies can take deductions on expenses linked to income earned abroad immediately though. Obama wants to require companies to delay deductions until the foreign income is claimed.
"It's the no. 1 issue in Washington for a majority of high tech leaders at a time when there is a lot on the table in Washington," said Bruce Mehlman, executive director of the Technology CEO Council, which also includes chiefs from Intel (INTC.O) and Hewlett-Packard (HPQ.N).
JOBS JOBS JOBS
When introducing Obama's deferral plan, a senior Obama administration official said the goal is to spur a company to locate a plant in Michigan instead of Malaysia.
Altshuler said she doubts the Obama administration's argument that his tax changes will save or create jobs, though and said "it is possible that it could decrease jobs." Continued...
View article on single page
Sweden's free-Web Pirate Party captures Euro seat
Also On Reuters
China to require site-blocking software on PCs
Full Coverage: Reuters Global Luxury Summit
Blog: Should NFL give Vick a second chance?
More Technology News
Apple cuts iPhone to $99, Jobs nowhere in sight
China to require software on PCs to block sites
Sweden's free-Web Pirate Party captures Euro seat
Fans gather for launch of "iPhone killer" Palm Pre
In downturns, Internet companies look to sell start-ups
More Technology News...
A selection of our best photos from the past 24 hours. Slideshow
Most Popular on Reuters
North Korea jails U.S. journalists, warns U.N. | Video
Crews find more bodies from Air France crash | Video
Canadians angered over "Buy American" rule
Obama speeds projects to create, save 600,000 jobs
China influence to grow faster than most expect: Soros
Carradine mystery deepens, family seeks FBI help
Netanyahu wants "maximum understanding" with U.S
What if U.S. banks repay government too fast?
UPDATE 4-Airlines wait for Airbus directive after crash
U.S. top court justice grants Chrysler sale delay
Most Popular Articles RSS Feed
Bodies from Air France crash found
Lebanese vote in tight contest
Men freed from China tunnel collapse
Obama soaks up Parisian culture
Tornado hits northern Italy
Celebrations mark D-Day anniversary
U.S. journalists get 12 yrs
Mummies found in Peru
No gas for this air-powered car
Tokyo's top dog skateboards
Most Popular Videos RSS Feed
We want to hear from you
Join the Reuters Consumer Insight Panel and help us get to know you better
Please take a moment to complete our survey
Help and Contact Us |
Advertise With Us |
Site Index |
Thomson Reuters Corporate:
Professional Products |
Professional Products Support |
About Thomson Reuters |
Latin America |
United Kingdom |
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.