Obama’s Foreign Profit Repatriation Plan

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July 31 (Bloomberg) -- Bloomberg’s Nela Richardson reports on President Obama’s corporate tax overhaul. She speaks on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

President obama is pushing for foreign profit repatriation.

We know apple, general electric and many others have bundled cash overseas.

How does that work?

We have a plan coming out of the house that would take the overseas income, about $2 trillion and profits being held overseas by multinationals and allowed to bring it back into the united states and tax it at a very low rate, five point 25%. on the other hand, we have a proposal from the white house that targets the way they use accounting to lower their bill.

That would reflect the corporate tax rate of 35%, maybe in a new tax system, 28%. we are looking at two different plans.

The first one would really benefit the multinationals like apple and ge.

The tax plan on inventories analyzes a lot of manufacturers, including big oil companies.

Firms like exxon, ventura, exxon, would all be affected by a repeal of the way they do inventory tax.

For many people, that's probably enough of a description.

But it's doubly worthwhile to go into detail about the specifics of the president's inventory tree.

Ultimately, it is though way the cost of goods sold is taxed area explain the difference.

Basically, if you have a closet full of new close and a closet full of old close, it allows you to value the inventory at the old close price.

It would make the overall inventory less expensive for you.

First in, first out does the opposite.

It allows not only multinationals, but small businesses, and this is the heat obama will see in the discussion around this.

Small businesses benefit from this ability to confer the value of inventory long-term.

It would let small companies and big companies to value them at the top line corporate tax rate.

As you know, there will be a lot of politics back and forth on this.

We have had plans from republicans, chairman of the house ways and means committee, how far apart is the plan from what republicans are actually proposing?

He has really led the charge on the corporate tax overhaul.

Before yesterday's speech, i would have said they were very close area president obama embraced this move and had embraced a revenue neutral corporate tax overhaul.

Now we are seeing this consensus is starting to break apart a bit.

That transition money that was going to lower the tax rate, president obama wants to spend that on infrastructure and new job creation.

It's hard to see how this calculus will work because a big plank of that calculus is being spent on a totally different direction.

Thank you very much for illuminating the subject.

This text has been automatically generated. It may not be 100% accurate.

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