The legislation would permanently exempt much of the profits
earned by American corporate subsidiaries in foreign countries.
The chairman of the powerful Senate Finance Committee has
released a long-awaited plan to overhaul the United States tax code
for multinational corporations, trying to jump-start an effort to
stem the flow of jobs and money abroad.
The legislation, offered Tuesday by the chairman, Max Baucus,
Democrat of Montana, would permanently exempt much of the profit
earned by American corporate subsidiaries in foreign countries, but
it would immediately tax profit from goods and services sold in the
United States from such subsidiaries.
It would establish a temporary 20 percent tax rate on billions of
dollars in corporate earnings that have been parked abroad and would
order all such earnings to be taxed, payable over eight years,
creating a one-time windfall of more than $200 billion for the
The idea is to end the "lockout effect" of the current tax code,
which encourages companies to move operations to low-cost
jurisdictions, sell into the United States and park profits overseas
The proposals "provide a path forward on tax reform," Mr. Baucus
said. "Some are Democratic ideas. Some are Republican ideas. The
common link is they are all ideas worth exploring."
At the beginning of the year, Republican leaders vowed to
overhaul the entire tax code by the end of 2014, but that push has
stalled. Representative Dave Camp of Michigan, chairman of the House
Ways and Means Committee, which originates all federal tax
legislation, has all but given up on his pledge to draft a
comprehensive tax bill this year.
"The reality is tax reform is so byzantine, so complicated,
you're not going to do it in 15 minutes," said Senator Ron Wyden,
Democrat of Oregon, a senior Finance Committee member. "This is a
big rock to push up the hill."
But while there is little support for taking on popular
individual tax breaks like those for mortgage interest and
charitable giving, there is broad bipartisan consensus that the
corporate tax code is outdated and overly complex, with a 35
percent tax rate that is the highest in the developed world. The
Obama administration has released its own corporate tax plan, as has
Standing in the way is the insistence on the part of lawmakers
like Mr. Baucus that any corporate tax overhaul be part of a
comprehensive plan that also simplifies the individual tax code and
helps the half of businesses that file through the individual code. …