The Road to Serfdom Logic in the Obama Budget's Plan to Go After Corporate Foreign Earnings
It'll eliminate tax loopholes that offer relief from America's oppressive rates
The corporate tax "reform" proposed in President Obama's budget would make F.A. Hayek flip in his grave. The
budget makes a fetish out of going after the trillion dollars in foreign earnings. American companies don't bring this money home because they'd be slapped with a corporate tax rate that's the highest in the free world. Moreover, America is among a few OECD countries that taxes the foreign earnings of domestic companies.
But instead of simply cutting these rates, the administration has come up with a draconian scheme to make companies pay their "fair share" that is a perfect illustration of Hayek's road to serfdom logic. Under this scheme, the president would eliminate the "deferral loophole" that allows companies to stash cash abroad.
Instead, it'll impose a 14 percent surcharge on their existing foreign holdings, an illicit form of retroactive taxation that is meant to fund its noble public works projects and middle-class entitlements. Obama is also proposing a 19 percent tax on future foreign holdings of these companies. "The administration hopes that if companies have to pay a tax on foreign income regardless of where they park it, they will bring it back home," I note. "That wishful thinking will backfire."
Go here to find out why and what the administration will do when it does.
