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[sludgehound]

Obama to Propose Tax on Firms' Foreign Earnings
10:22 ET
WASHINGTON--U.S. President Barack Obama will propose a $478 billion increase in funding for rebuilding American infrastructure that would be paid for by levying a one-time tax on foreign earnings from U.S. companies, a White House official said Sunday.
In the proposal that will be outlined in Mr. Obama's fiscal 2016 budget on Monday, companies would be subject to a 14% tax on the up to $2 trillion of overseas earnings they have already accumulated, the official said. The money the new tax generates would be used to expand the Highway Trust Fund's surface transportation reauthorization from four years to six years, the White House official said.
Mr. Obama is also proposing a 19% tax on all foreign earnings by U.S. companies as they are accumulated, the official said. Under the proposal, companies would then be able to reinvest those funds in the U.S. without paying an additional tax.
Companies often pay little or no U.S. tax on their foreign profits now, because the U.S. allows them to defer that tax until the money is brought home. They can further offset their U.S. tax with credits for foreign tax paid.
"Unlike a voluntary repatriation holiday, which the president opposes and which would lose revenue, the president's proposed transition tax is a one-time, mandatory tax on previously untaxed foreign earnings, regardless of whether the earnings are repatriated," the official said. "This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely."
Write to Carol E. Lee at [e-mail] and John D. McKinnon at [e-mail]

(END) Dow Jones Newswires
02-01-15 1022ET
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