US IT industry opposes Obama's move to tax overseas earning

Noting that Obama is right to focus on economic growth and job creation for the middle class, ITI said, that his approach is wrong. He said, "Certainly, focusing on STEM education programs, smart infrastructure projects to build a modern transportation system, and fixing our broken immigration system would drive undeniable economic benefits for the country."

"The Budget closes loopholes that perpetuate inequality by allowing the top one per cent of Americans to avoid paying any taxes on their accumulated wealth and uses that money to help more young people go to college," he added.

Later in a news conference Jason Furman, top economic advisor, said the proposal that Obama is making would be mandatory on all overseas earnings. "As a result, it raises money -- USD 270 billion over 10 years -- as opposed to a repatriation holiday would lose money. This is part of a plan to reform the tax system.

So on a going-forward basis, you would have a 19 per cent minimum tax on all the earnings of foreign subsidiaries of US corporations," he said. Congressman Charles W Boustany said that the President's new plan to finance roads and bridges is problematic because of its high rates and immediate effective date, denying businesses the ability to plan ahead with a phase-in period.

"This will weaken American competitiveness and encourage more American companies to relocate to more favourable tax environments abroad.

We need comprehensive tax reform that will lower overall corporate rates and encourage growth, not a six-year band-aid that won't fix these problems in the long term," he said.