WASHINGTON Jan 8 If U.S. corporations' ability
to defer taxation of their foreign profits were limited, as the
White House favors, tens of billions of dollars in new
government revenue could be raised over a decade, congressional
researchers said on Tuesday.
In a report that could fuel the debate about how to tax U.S.
multinational companies, the Congressional Budget Office said
changes of the sort backed by the White House "would boost both
efficiency and tax revenues," raising about $114 billion in 10
That would exceed new revenues available under another
approach favored by many corporations. A "territorial system,"
as promoted by corporate lobbyists and Republicans in Congress,
would raise $76 billion in a decade, under one estimate cited by
"Countries with territorial ... tax systems collect less tax
revenue," all else equal, than countries that tax all corporate
profits - foreign and domestic - the same, CBO said.
Congress for months has been laying the groundwork for an
overhaul of the U.S. tax code. This may be less likely to happen
now that the "fiscal cliff" deal of last week - which raised
ordinary income taxes on affluent Americans - has hardened
Republican opposition to considering even more tax increases.
But some aides on Capitol Hill still see a corporate tax
revamp as possible and various related studies continue to be
At the moment, big corporations must pay the top 35-percent
corporate tax on foreign profits, but not until those profits
are brought into the country from offshore. This exception is
known as corporate offshore income deferral.
Because of it, $1.6 trillion in earnings was parked overseas
by 290 large U.S. companies at the end of 2011, according to
Citizens for Tax Justice, a left-leaning tax think tank.
Corporate lobbyists last year failed to convince Congress of
the need for a repatriation tax holiday that would have let them
bring those profits home for little or no tax.
Under the territorial approach backed by many corporations,
companies could bring foreign profits home with little or no
corporate income tax imposed on a permanent basis, not just
during a temporary, one-year holiday.
President Barack Obama and fellow Democrats generally
opposed the holiday idea and have been cool to the territorial
approach. But they agree with Republicans and many businesses
that the 35 percent corporate tax rate - among the world's
highest - should be cut.
The non-partisan CBO did not make a formal recommendation on
any particular corporate tax method.