By: Chris Besse
In his State of the Union Address, President Obama spoke on tax reform and how to reduce the $16.4 trillion dollar deficit that the government is now facing.[i] President Obama talked about the impending sequestration and cuts in programs such as Medicare, Medicaid and social security. However, what you may have missed in the President’s address is his call for a tax reform “with everyone doing their fair share.”[ii].
President Obama called for a bipartisan tax reform that will put a stop to tax abuses such as tax loopholes and tax havens. It is shocking that 84 out of the top 100 American corporations dodge taxes by using tax havens such as those in the Cayman Islands.[iii] These corporations pay only a 15% tax rate in foreign countries, rather than the United States’ 35% and withhold over $150 billion each year in federal taxes.[iv] President Obama proclaimed, “to hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected.”[v]
Tax loophole legislation such as the CUT Tax Loopholes Act introduced by Senator Carl Levin (D-MI) and the Corporate Tax Fairness Act introduced by Senator Bernie Sanders (I-VT) have already started the process to put a stop to tax dodging. And not only are these pieces of legislation good for the US but they will send a global message to end the status quo of dodgy practices that perpetuates the cycle of poverty around the globe. President Obama’s State of the Union Address has made it clear that putting an end to tax loopholes and tax havens is the appropriate action to take when it comes to a tax reform. As President Obama states in his address, “let’s set party interests aside, and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future.”[vi]
[i] New York Times, “Federal Debt Ceiling”, February 19,2013. http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html
[ii] WP Politics. “State of the Union 2013: President Obama`s address to Congress”. http://www.washingtonpost.com/politics/state-of-the-union-2013-president-obamas-address-to-congress-transcript/2013/02/12/d429b574-7574-11e2-95e4-6148e45d7adb_story.html
[iii]US PIRG, “Loopholes Cost Taxpayers $100 Billion Last Year”. http://www.uspirg.org/issues/usp/close-corporate-tax-loopholes
[iv] US PIRG, “The Hidden Cost of Offshore Tax Havens”. http://www.uspirg.org/reports/usp/hidden-cost-offshore-tax-havens
[v] WP Politics. “State of the Union 2013: President Obama`s address to Congress”. http://www.washingtonpost.com/politics/state-of-the-union-2013-president-obamas-address-to-congress-transcript/2013/02/12/d429b574-7574-11e2-95e4-6148e45d7adb_story.html
[vi] WP Politics. “State of the Union 2013: President Obama`s address to Congress”. http://www.washingtonpost.com/politics/state-of-the-union-2013-president-obamas-address-to-congress-transcript/2013/02/12/d429b574-7574-11e2-95e4-6148e45d7adb_story.html
Photo Credit: http://bostonglobe.com/news/politics/2013/02/12/text-president-obama-state-union-address/pRqldtCIGudv4eWvBOfveJ/story.html
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