Obama Plans To Close Tax Loopholes

The White House says they are now focusing on companies that use loopholes in the law, allowing them to legally avoid paying billions in taxes and ending tax incentives for creating jobs overseas, CNN reports.

The Obama administration plans to raise $103.1 billion dollars by removing tax advantages for investing overseas and will use that money to help make a tax credit permanent, administration officials said. The administration also hopes to raise $95.2 billion dollars over the next 10 years by cracking down on overseas tax havens.

The White House, under the plan, would eliminate the “check-the-box” provision which allows corporations to designate overseas subsidiaries as branches of the company, not subjected to taxes. This tax loophole enables companies to avoid paying U.S. taxes. One senior administration official said it has cost the U.S. government $86.5 billion over 10 years and is “the most unjustified loophole in the international tax system which needs to close down.” It is a legal practice, the officials said, involving “companies taking advantage of a very bad law.”

A senior administration official said the U.S. government also loses about $9 billion in tax revenue from wealthy individuals who use illegal tax havens overseas. The White House will announce the changes as part of the administration’s budget. The plans includes the IRS hiring almost 800 new employees, who would be devoted to cracking down on overseas tax abuse.