What Is Tax Deferral?

The Obama Administration is proposing to raise more than $100 billion from American multinational corporations by limiting in some way the ability of U.S. companies to defer tax on profits earned abroad. The premise behind the proposal is that by raising the taxes paid on the foreign profits of U.S. companies earned abroad, the companies will somehow have more incentive to locate their operations here in the United States.

The proposal, however, is flawed and fails to recognize that in the increasingly global economy where capital flows freely across borders, the United States can no longer expect other countries to follow its policies. The proposal will penalize the foreign operations of U.S. companies operating abroad and make it more difficult for them to compete with foreign companies.

To learn more, go to: http://www.taxfoundation.org/news/show/24683.html