Obama faces uphill battle to close multinational tax loopholes in budget
US President Barack Obama will face a political battle to close a tax loophole that allows American multi-nationals based here to avoid paying taxes on overseas profits.
The President said in his budget speech yesterday that he wants to impose a one-off 14pc tax on US profits stashed overseas as well as a 19pc tax on any future profits.
At present, those earnings are supposed to be taxed at a 35pc rate, but many companies avoid this through a loophole that defers taxation on active income that is not brought into the United States, or repatriated.
But the President is likely to face opposition from Republicans, who control both the Senate and House of Representatives, after electoral wins in November's mid-term elections.
Both Democrats and Republicans want tax reform. But the type of reform differs. The proposal from President Obama, unveiled in his fiscal 2016 Budget yesterday, would mean higher tax bills for multinationals, including those in the technology and pharmaceutical sectors, that have come to Ireland.
The $238bn raised from the one-time tax would fund repairs and improvements to roads, bridges and other infrastructural improvements that would replenish the Highway Trust Fund as part of a $478bn package.
Some Republicans have already voiced their opposition.
One Republican in the House of Representatives - Paul Ryan - accused the President of exploiting "envy economics".
His spokesman said Republicans would attempt to find common ground if tax reform was about simplifying the code and lowering rates.
But he said that wouldn't happen if the President "tries to sock American businesses with big tax hikes."
The United States' inability to tax earnings by American firms located elsewhere has become a political football in recent years - and Ireland has been heavily criticised because of its low corporation tax regime.
Powerful US Senator Carl Levin has repeatedly called Ireland a "tax haven" and accused the Irish Government of giving a "special deal" to Apple, but the Government denies this.