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Obama announces plan to close US tax loopholes

 President Barack Obama listens to Treasury Secretary Timothy Geithner make a statement on tax reform, Monday, May 4, 2009, in the Grand Foyer of the ...

Obama

President Barack Obama listens to Treasury Secretary Timothy Geithner make a statement on tax reform, Monday, May 4, 2009, in the Grand Foyer of the ...

President Barack Obama proposed Monday to close U.S. tax loopholes for companies and individuals with operations or bank accounts overseas.
The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home. He also called for more transparency in bank accounts held by Americans in tax havens such as the Cayman Islands.
"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama said.
Obama said that his plan would generate $210 billion in new taxes over 10 years and "make it easier" for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in the federal deficit, expected to be $1.2 trillion in 2010.
Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.
The current law, Obama said, "says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "
He said the government also is hiring nearly 800 new tax agents "to detect and pursue American tax evaders abroad."
Congress may resist significant portions of Obama's plan.