Big Biz, Dems Rebel on Offshore Tax Reforms

Business groups and lawmakers worry about effect on US competitiveness
By Nick McMaster,  Newser Staff
Posted May 5, 2009 12:00 PM CDT
US Treasury Secretary Timothy Geithner joins delegates at the International Monetary Fund and World Bank Development Committee meeting at World Bank headquarters in Washington, Sunday, April 26, 2009.   (AP Photo/J. Scott Applewhite)
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(Newser) – President Obama’s plan to crack down on the tax practices of US-based multinationals has elicited much squawking from business groups and lawmakers who fear it may limit the competitiveness of American firms, the Hill reports. Even Democrats have greeted Obama’s proposals with trepidation: “I want to make certain that our tax policies are fair and support the global competitiveness of US businesses,” said Max Baucus.

Obama and Treasury Secretary Tim Geithner shot back that the changes merely restored balance to a system that rewards exploitation. “The way to make American businesses competitive is not to let some individuals and businesses dodge their responsibilities,” Obama said. But business groups note that the US already has a much higher corporate tax rate than other industrialized nations, and that many do not subject foreign-made profits—the object of US firms’ “deferrals”—to any domestic tax.