A Real Hot Button Issue
When I got word that President Obama was going to propose major changes to the nation’s financial regulatory system, I hustled to Washington, D.C. to cover this huge story first hand and get reaction from government officials and business leaders.
One of those I talked with was Larry Summers, director of the National Economic Council and one of the chief architects of President Obama’s economic policies. (See the video.)
While I had him, I also wanted to take the opportunity to ask about another issue that business leaders are telling me is a huge concern right now, and that’s how the government will tax international profits.
In this age of a global economy, increased taxation on international profits could significantly impact a company’s bottom line, so it’s something investors need to be aware of.
I mentioned to Mr. Summers how a lot of people in business are unnerved by the possibility of higher taxes on foreign profits, and here’s what he told me:
“I think most people who’ve looked at the international tax system have seen how much profits are located in jurisdictions where there’s a very low tax rate but where the economies are small there can’t be that much actual economic activity. That’s got to be something that we view with concern and want to take a serious look at. That’s what the President’s proposals are directed at, but we very much want to work with others to make sure that we have as fair, as pro-American a tax system for corporations as we possibly can.”
I also asked if he’s hearing from business leaders about this:
“Oh sure. There are concerns that they’ve expressed. We’ve also heard concerns from many businesses who recognize that some of the things that we want to do in terms of cracking down on tax havens are right and important for people who feel that they’re doing the right thing but they’re put at a competitive disadvantage by others who aren’t. They think it’s important for us to establish rules so you won’t be able to get ahead by relocating profits to tax havens or engaging in other practices of that kind, and we want to be responsive to that concern.”
Stay tuned. This is an issue you can expect to hear much more about, and I will continue to follow it closely for you.
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