President Barack Obama is renewing his call for Congress to close tax breaks that reward some U.S. companies with overseas subsidiaries, a proposal that has raised concerns among some lawmakers in the president’s own party.
In his weekly radio and online address (10-16-10), Obama said the tax breaks encourage companies to create jobs and profits in other countries.
“There is no reason why our tax code should actively reward them for creating jobs overseas,” Obama said. “Instead, we should be using our tax dollars to reward companies that create jobs and businesses within our borders.”
At issue is a bill that stalled in the Senate last month that would end some tax credits and deferrals for U.S. companies for operations overseas.
Though Obama singled out Republican opposition, the bill also failed to get support from some Democrats, including Senate Finance Committee Chairman Max Baucus, D-Mont., who expressed concern that change would put the U.S. at a competitive disadvantage.
The ending of the tax loopholes has been opposed by business groups, including the National Association of Manufacturers.
Obama said that while companies that conduct business internationally do make an important contribution to the U.S. economy, it doesn’t make sense to grant them tax breaks when companies at home are struggling to rebound from the economic crisis.
Obama has said he wants revenue collected from closing the loopholes to be used for other business tax breaks by making permanent research and development tax credits and allowing businesses next year to write off all new equipment costs.