A necessary fiddle around the edges

Rather than take on Wall Street financiers (see last 2 posts), Obama is taking on the companies that the financiers finesse, according to the Financial Times.

Obama squares up to corporate America

Barack Obama ["who campaigned relentlessly on the issue of closing offshore loopholes"] squared up on Monday for what looks likely to be his administration's first major battle with big business, when he unveiled crackdowns on offshore tax avoidance and evasion by US companies and individuals.

The steps announced by the president would include closing down the notorious "check box" loophole that enables companies to avoid US and foreign taxes by shifting income to subsidiaries based in offshore tax havens.

Mr Obama cited a Cayman Islands building where more than 18,000 US companies are housed. "Either this is the biggest building in the world or it is the biggest tax scam in the world," he said.

The administration says more than a third of US foreign profits in 2003 came from Bermuda, the Netherlands and Ireland. It also estimated that US companies paid an effective tax rate of just 2.3 per cent on the $700bn they earned in foreign profits in 2004.

But corporate America reacted with dismay

"It is the wrong idea, at the wrong time for the wrong reasons," said John Castellani, Business Roundtable president. "It will cripple growth, reduce the competitiveness of US companies overseas and destroy jobs."

The National Association of Manufacturers called the proposals "disastrous"

It appears the members of the Homeland Investment Coalition aren't as patriotic as they had claimed when it comes to bringing the profits back home.