Washington: End tax breaks that reward some U.S. companies with overseas subsidiaries and encourage those businesses to create jobs in other countries, President Barack Obama is telling Congress.
Yet it`s an idea that has raised concerns even among some lawmakers in the president`s own party. At issue is a bill, now stalled in the Senate, that would do away with some tax credits and deferrals for U.S. companies for operations abroad.
"There is no reason why our tax code should actively reward them for creating jobs overseas," Obama said in his weekly radio and Internet address Saturday. "Instead, we should be using our tax dollars to reward companies that create jobs and businesses within our borders."
Though Obama singled out Republican opposition, the bill also failed to get support from some Democrats, including the chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont. He has expressed concern that the change would put the U.S. at a competitive disadvantage.
The ending of the tax provisions has run into opposition from 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 ending the tax provisions to go to other business tax breaks, by making permanent research and development tax credits and allowing businesses next year to write off all new equipment costs.
In the GOP address, Rep. Mike Pence, R-Ind., urged House Speaker Nancy Pelosi, D-Calif., to call Congress back into session to take an immediate vote on whether to extend Bush-era tax cuts. "The prosperity of the American people is more important than the political fortunes of any politician or any political party," Pence said.
Pelosi and Senate Majority Leader Harry Reid, D-Nev., have said the tax issue will be taken up after the Nov. 2 election. The tax cuts have been a point of contention between the president and Republicans in the lead-up to the midterm elections. The GOP wants to extend the tax cuts for all Americans, including the top income earners, while Obama wants to extend the tax cuts only for the middle class — those families earning less than $250,000 a year.