President Barack Obama is planning a tax increase on U.S. multinational businesses that would add a total of $276 billion to the U.S. budget, according to The Washington Post.
The 2015 plan includes six new measures to plug leaks in the tax code that multinationals are using to avoid paying the 35 percent federal corporate tax rate imposed by the U.S. government – the highest in the industrial world.
Both sides of the debate want changes to the tax code. Corporate executives have been arguing for years for a reduction in the tax rate, but those in favor of the President’s plan argue that most multinationals don’t pay the 35 percent rate anyway, by exploiting loopholes in the tax code. GE, for example, reported that it only paid an effective tax rate of 4.2 percent in it’s most recent annual filing, according to the news source.
MSN Money explained that the plan isn’t likely to find any traction in a congress that has trouble agreeing even on general tax policy, let alone specifics. Manal Corwin, national leader of the international tax practice at KPMG LLP in Washington, explained to the news source that, in actuality, the plan is intended to set down a marker in the national tax debate.
“I don’t know that anybody’s predicting that we’re suddenly going to see tax reform happen,” said Corwin. “There are certain themes that seem to be repeating themselves.”
Under the current tax code, U.S.-based multinationals face a full 35 percent tax rate for income they make around the world after the tax they pay to local governments. As other countries have reduced their tax rates, businesses have stockpiled an estimated $2 trillion in untaxed, offshore profits. While some feel that the U.S. should lower its tax rates in order to encourage businesses to repatriate their money, others feel that the loopholes through which these businesses are avoiding the tax should be closed.
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
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