Just as AAPL stock hits record highs and single-handedly rescues Q4 earnings from the doldrums, it appears President Obama is bringing his own brand of 'middle-class-economics' Robin-Hood-iness to crush the 'wealth generating' machine that has served America's 1% so well for so long. As AP reports, The White House plans a six-year half a trillion dollar public works program financed with a one-time mandatory tax on profits that U.S. companies have amassed overseas. Under current law, profits only face federal taxes if they are returned, or repatriated, to the US; but Obama's new deal would set a tax on accumulated foreign profits at 14% and due immediately as part of a broader administration plan to overhaul corporate taxes. Of course, with Republicans 'in charge', it is unlikely to pass as Paul Ryan blasted, "the president is trying exploit envy economics again," adding, "top-down redistribution doesn't work."
President Barack Obama's budget will propose an ambitious six-year, $478 billion public works program of highway, bridge and transit upgrades, half of it financed with a one-time mandatory tax on profits that U.S. companies have amassed overseas, White House officials said.
The proposal, one of the main components of the $4 trillion spending plan for the 2016 budget year that Obama will send to Congress on Monday, attempts to tap into bipartisan support for spending on badly needed infrastructure repairs and construction.
The tax on accumulated foreign profits would be set at 14 percent and due immediately. Under current law, those profits only face federal taxes if they are returned, or repatriated, to the U.S. where they face a top rate of 35 percent. Many companies avoid U.S. taxes on those earnings by simply leaving them overseas.
The foreign earnings tax would be part of a broader administration plan to overhaul corporate taxes by ending certain tax breaks and lowering rates, a challenging task that Obama and Republican congressional leaders insist they are poised to tackle this year.
Under Obama's plan, the top corporate tax rate for company profits earned in the U.S. would drop to 28 percent. While past foreign profits would be taxed immediately at the 14 percent rate, going forward new foreign profits would be taxed immediately at 19 percent, with companies getting a credit for foreign taxes paid.
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"What I think the president is trying to do here is to, again, exploit envy economics," Republican Rep. Paul Ryan of Wisconsin, the new chairman of the tax writing Ways and Means Committee. "This top-down redistribution doesn't work."
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This time, the budget will call for the one-time 14 percent mandatory tax on the up to $2 trillion in estimated U.S. corporate earnings that have accumulated overseas. That would generate about $238 billion, by White House calculations. The remaining $240 billion would come from the federal Highway Trust Fund, which is financed with a gasoline tax.
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So tax foreign cash and tax cheap gas...
In summary:
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Perhaps most ironically - CNBC will now know what the "money on the sidelines" is waiting for... to pay taxes!!
