Companies Fight Tax On Foreign Profits

A broad business coalition that includes many of the U.S.'s largest chemical and pharmaceutical companies is fighting an effort by the Obama Administration to increase taxes on overseas profits made by U.S.-based multinational corporations. At issue is a provision in the White House's budget proposal that ends a tax break allowing U.S. companies to indefinitely delay paying taxes on much of their earnings from foreign operations. Corporate lobbyists say the "deferral" policy helps U.S. companies compete in global markets against companies from countries that do not tax overseas earnings. "American companies require only a level playing field in international tax policy," says a letter to congressional leaders from 200 companies, including Dow Chemical, DuPont, Merck & Co., and Pfizer. Critics say the policy encourages companies to move facilities and jobs overseas instead of keeping them in the U.S. The business coalition says the proposal to repeal deferral and impose the 35% U.S. corporate tax rate on firms' overseas profits would "upset the competitive balance between U.S. and foreign companies. This will result in a loss of jobs for Americans and serious negative consequences for the U.S. economy."