US Firms Keep Billions Overseas(WP p.1 analysis of Kerry plan)

[DeepModem Mom]

Analysis
U.S. Firms Keep Billions Overseas
Kerry's Plan Spotlights Huge Untaxed Earnings
By Jonathan Weisman
Washington Post Staff Writer
Friday, April 2, 2004; Page A01


....Last week, Sen. John F. Kerry (Mass.), the likely Democratic nominee for president, made...lucrative income-tax deferrals a focal point of his campaign, asserting that they are driving companies to expand abroad....

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The Kerry campaign said U.S.-based multinational corporations are deferring taxation on $12 billion in foreign earnings each year, a figure that may be low, corporate tax experts say. Corporate tax revenue in 2003 fell for the third straight year, to its lowest in a decade. As a percentage of the economy, business taxes last year reached the second-lowest level since the Great Depression. Few doubt that tax avoidance has been a reason for meager corporate tax collections, and the deferral of taxes on foreign earnings may be one of the biggest factors.

"It's probably next to impossible to get a read on how big the number is, but it's fair to say it's a big, big deal," said Douglas A. Shackelford, an accounting professor at the University of North Carolina's Kenan-Flagler Business School who has studied the issue.

Since Kerry announced his corporate-tax-reform proposal, tax experts have debated its impact on the U.S. job market and its consequences for U.S-based multinationals. But liberal and conservative tax policymakers now appear to agree on one point: The byzantine U.S. system of foreign business taxation is in need of major change....


http://www.washingtonpost.com/wp-dyn/articles/A43377-2004Apr1.html