Obama Would Impose Onetime Tax on Overseas Profits
Policy + Politics

Obama Would Impose Onetime Tax on Overseas Profits

© Yuri Gripas / Reuters

President Obama's budget request set for release Monday includes plans for a six-year, $478 billion public works program that would be paid for with a one-time 14 percent tax on overseas corporate profits.

Details of Obama's budget plan released in recent days have been widely rejected by congressional Republicans. But finding a way to enact a new federal infrastructure spending plan has been an unattainable goal on Capitol Hill for several years. Speaker John A. Boehner (R-Ohio) hoped to pass a new highway bill shortly after the GOP took control of the House in 2011 but has struggled to build support among skeptical conservatives.

According to a document shared by administration officials on Sunday, Obama's plan to rebuild the nation's airports, bridges, highways and railroads would be paid for by imposing a 14 percent tax on up to $2 trillion in profits that companies have accumulated overseas over a number of years to avoid paying corporate income taxes. That's far lower than the current top corporate tax rate of 35 percent. The one-time tax on the repatriation of foreign profits differs from other proposals to offer a "tax holiday" for companies that would pay a much lower tax rate voluntarily to help fund new road construction projects. Obama opposes such tax holidays.

Obama also wants to cut the top corporate tax rate to 28 percent and tax foreign profits at 19 percent, but companies would get credit for any foreign taxes paid, according to the details released Sunday.

Finding ways to compel large companies to repatriate has been a top goal for Democrats, who seized on the issue of closing corporate tax "loopholes" last year in a bid to build support among working-class voters.

Those ideas have been roundly criticized by Republicans, who seized full control of Congress in November. But some GOP leaders, including Boehner, have said they are willing to work with the White House and Democrats on Obama's idea of giving child-care tax breaks to working parents. And other Republicans have partnered with Democrats to propose raising the federal gas tax or imposing other taxes on large corporations to pay for a new highway bill.

Democrats have said in recent days that they fully embrace Obama's new budget plan and will strongly defend it as Republicans take full control of the budget and appropriations process.

Rep. Chris Van Hollen (D-Md.), a leading Democratic voice on budgetary matters, said last week that Obama's proposals "show that he’s focused on building on the economic progress we’ve seen in the last couple of months and focused on meeting the realities of the middle-class squeeze."

Rep. Peter Welch (D-Vt.) is among the Democrats eagerly seeking ways to work with Republicans on a new highway bill and tax reform. He said he's talked to Boehner and other Republicans about finding ways to build support for "any reasonable revenue source" to pay for the highway bill.

"I believe that it would benefit, even though we’re the minority, to make it clear that we would support a revenue source," he said. "The point is, do we want to spend our time vilifying the failure of the Republicans to get a long-term transportation bill passed, or do we want to take constructive steps to help get one passed?"

This article originally appeared in The Washington Post