While the IRS is in the midst of a "voluntary compliance" initiative to entice folks with offshore accounts to report them, President Obama has decided to take the stick rather carrot approach.
The prez today announced proposals aimed at
the tax benefits enjoyed by companies and wealthy individuals who harbor
cash in offshore accounts.
The details will be released later this week when
the White House presents its formal budget. Early reports say the plans could help raise $210
billion in revenue over 10 years.
Hammering those who appear to be sheltering income from U.S. taxation in foreign accounts and moving production to other countries to save, in part, on tax costs is a no-brainer, fiscally and politically.
But don't expect the plan to breeze through Congress.
Large multinational companies (for example, Microsoft, General Electric and Cisco Systems) have lots of friends on Capitol Hill. Expect those Representatives and Senators to repeat the companies' arguments that such drastic changes could lead not to the hoped-for repatriation of taxes, but instead to job losses or higher prices whencompanies compensate for the bigger tax bite.
The changes to snare rich individuals who hide income from the IRS is likely to get a better reception. Most folks agree with the President when he said at the press conference today, "For years, we've talked about shutting down overseas tax havens. That's what our budget will finally do."
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