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Obama administration announces plans to curb overseas tax havens

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] The US Department of the Treasury on Monday announced reforms to the US tax code to curb overseas tax havens and end tax incentives for companies to create jobs out of the country. In a joint press conference with Treasury Secretary Timothy Geithner, President Barack Obama said:For years, we've talked about ending tax breaks for companies that ship jobs overseas and giving tax breaks to companies that create jobs here in America. That's what our budget will finally do. We will stop letting American companies that create jobs overseas take deductions on their expenses when they do not pay any American taxes on their profits. And we will use the savings to give tax cuts to companies that are investing in research and development here at home so that we can jump start job creation, foster innovation, and enhance America's competitiveness. For years, we've talked about shutting down overseas tax havens that let companies set up operations to avoid paying taxes in America. That's what our budget will finally do.US business leaders have already sharply criticized the plan, saying it would actually harm the US economy. Foreign governments, such as the Netherlands, have reacted with surprise at being named by Obama as a corporate tax haven, along with Ireland and Bermuda.The US government is currently negotiating with the government of Switzerland, another country criticized as a tax haven, to revise the tax treaty between the two countries. Last week, the Swiss Federal Office of Justice filed a brief in the US District Court for the Southern District of Florida arguing that a lawsuit filed by the US Department of Justice (DOJ) and the Internal Revenue Service (IRS) seeking information on 52,000 UBS account holders suspected of tax evasion violates its national sovereignty as well as Swiss banking law. The Swiss government also expressed concern over the potential ramifications of the lawsuit on the tax treaty negotiations.

Full post as published by JURIST - The Paper Chase on May 05, 2009 (boomark / email).