May 4th, 2009
03:24 PM ET

Financial Dispatch: Obama’s corporate tax crackdown

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Andrew Torgan
CNN Financial News Producer

President Barack Obama today detailed his administration’s plans to close tax loopholes on U.S. multinational corporations that allow them to legally avoid paying billions in taxes, as well as crack down on overseas tax havens.

The goal is to help create new jobs in the United States and make the tax code fairer.

"I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens," Obama said in announcing his proposals.

But tax policy experts and corporate lobbyists say such measures, unless accompanied by a reduction in the corporate tax rate, will push more companies to move their operations - and jobs - overseas to more tax-friendly countries.

In addition, the White House wants to tighten rules that have allowed thousands of wealthy Americans to open offshore bank accounts - think Switzerland and the Cayman Islands - in an effort to duck taxes at home.

No increase expected for Social Security Benefits

Recipients of Social Security checks are in for a shock: for the first time in more than 30 years, they will not be getting any increase in their benefits next year.

Social Security checks have increased every year since 1975. It’s a cost of living adjustment meant to keep pace with inflation. But according to a report from the Congressional Budget Office, Social Security benefits likely won't increase in 2010 or 2011 – a move that will affect some 50 million Americans.

And after 2011, the increase in benefits will be less than 2%, compared with a nearly 6% increase this year.

Why the change? Well, despite the ongoing recession, the severe downturn in the housing market and countless trillions of dollars in combined stock market losses, inflation has been low. The government’s Consumer Price Index for the year ended in March posted its first annual drop in more than half a century due to lower energy and transportation costs.

Of course food, clothing and medical costs are all up, but there is one silver lining: most people’s Medicare “Part B” premiums – which cover doctors’ services – are protected by federal law and will not go up.

Unfortunately, the estimated 25% of Medicare beneficiaries not protected will see their basic premium rise from just over $96 this year to $119 next year and $123 in 2011.

Fiat may seek deal with GM Europe

Italy's Fiat could seek a merger of its auto group with General Motors' Europe unit, then spin off the combined company and list it, Fiat said on Sunday.

Fiat CEO Sergio Marchionne, fresh off striking an alliance with bankrupt Chrysler last week, met with German government ministers today to discuss a bid for German car maker Opel, part of GM Europe.

GM Europe sold about 1.4 million cars last year, while Fiat sold nearly 1.2 million, according European auto industry data.

Boston Globe’s future uncertain

The management of the Boston Globe said today it will not file a plant closing notice required to shutter the 137-year-old newspaper after reaching cost-saving agreements with six of seven unions involved in negotiations for concessions.

Federal law requires companies to give 60-days notice to the state and employees before closing a business.

Globe management had said late Sunday it would file the plant closing notice as it approached a deadline to reach agreement with four of the paper's major unions. The newspaper’s owner, The New York Times Co., has threatened to close the Globe unless it gets $20 million in concessions from the newspaper's unions. The Boston Globe is projected to lose $85 million this year with significant cost savings, according to New York Times.

Wall Street gets housing boost

Stocks on Wall Street raced higher by double-digits this morning amid signs the housing meltdown could finally be ending.

The National Association of Realtors says its Pending Home Sales Index rose in March for the second-consecutive month and is up year over year. The index showed a gain of 3.2% from February and is 1.6% higher than a year ago.

But the NAR's chief economist cautioned that It may still take a while before the housing market gains enough momentum to firmly state that the downturn has been reversed.

Filed under: Andrew Torgan • auto bailout • Economy • Finance • Wall St.
soundoff (6 Responses)
  1. robert

    this President is going to destroy this country

    May 4, 2009 at 6:55 pm |
  2. Jim Carroll internet free press.com

    We need to take a good look at Article1, Section 8, of the Constitution which gives the Federal Government the power to tax, to
    create money and borrow money. We could keep a balanced money supply with low taxes that are indexed so money can be put into the econony when needed and taken out when needed. We should create money rather than borrow it. We should understand The Philosophy of Mixturism which would make problem solving easy.

    May 4, 2009 at 6:39 pm |
  3. Art

    It's half our problem! I hope he can do it and do it right. I like what Earle from Florida did. He's right, the middle class can't carry the burden any longer, we will surely sink.

    May 4, 2009 at 6:31 pm |
  4. earle,florida

    If we were to go back to a fundamental tax structure where corporate paid their fair share instead of getting a check from the government annually,we wouldn't have to rewrite some of these arcane tax laws. The loop-holes are caverns,dwellings suitable for only the devious fraudsters! History doesn't lie,and from 1915-present the," maximum individual income tax rate", was 8% – 40%! Starting with: President Wilson(1913-23/ 8%-60%); President Coolidge (1923-29/60%-25%); President Hoover(1939-33/25%-65%); President Roosevelt(1933-45/65%-94%); President Truman(1945-53/94%-87%); President Eisenhower(1953-61/87%-87%); President Kennedy(1961-63/87%-82%); President Johnson(1963-69/82%-72%); President Nixon(1969-74/72%-70%); President Ford(1974-77/70%-70%); President Carter(1977-81/70%-70%); President Reagan(1981-89/70%-28%); President Bush#41(1989-93/28%-34%); President Clinton(1993-2000/34%-39%); President Bush#43(2000-08/39%-33%); President Obama(2008-Present/33%-40%); please be advived that this data is from [(heritage.org/Research/Taxes),(ref: Historical Lessons of Lower Tax rates/D J Mitchell,Ph.D.)] Please note the inverse relation on past economies regarding current growth revenue sharing, juxtaposed with todays correlated revenue growth. This is definitely a major reason/factor of why were in the mess were in today,... money goes offshore,money goes into the wealthy pockets of billionaires,just who pays? The middle class,period

    May 4, 2009 at 5:45 pm |
  5. Myra Boyd

    Re: the tax breaks for Corps., for years they were "supposed" to take those tax breaks and reinvest in the companies here in America, to expand, to hire, etc. Oh sure, pipe dreaming at its best! Never happened, never will, the breaks just go in their pockets while they continue to build overseas jobs and hire there instead of here.
    As far as no cost of living increase for SS, what else will be new? As a SS recipient I'm not surprised but I'd best not see one of the politicians, on either side of the isle get another pay increase until Americans get one! The only work either party does right now is to kiss the backsides of Corporate big whigs so they can continue to line their pockets to insure their own well being for the future.

    May 4, 2009 at 4:07 pm |
  6. Melissa

    Good. This is exactly whats needed. I like this President.

    May 4, 2009 at 3:41 pm |