Obama’s Tax Plan Draws Stiff Opposition

By NW Digest Team at June 24th, 2009.

In a story earlier this month from Bloomberg News, Microsoft CEO Steve Ballmer came out strongly opposed to a new corporate tax plan President Obama proposed.

For many leading American firms who do business overseas, Obama’s plan to eliminate the deferral of taxes on foreign profits could increase costs and cut into profits by as much as 10 to 15 percentage points. Bloomberg reported:

…Ballmer, Symantec Chairman John Thompson and the heads of smaller companies such as privately held Bentley Systems, an Exton, Pa.-based maker of engineering software, said such policies would hurt domestic investment, reduce shareholder value and increase the cost of employing U.S. workers.

Ballmer said the deduction limits for companies that defer tax on foreign profits would raise the cost of employing U.S. workers. Fiduciary responsibility to shareholders would require Microsoft to cut costs, he said, meaning many jobs would be moved out of the country.

Ballmer concluded, “It makes U.S. jobs more expensive…We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.” As one of the Northwest’s leading employers, political leaders in the region are sure to be nervous.

President Obama, you may recall, promised to “save or create 2.5 million jobs” during the presidential campaign.

So why would the President now be willing to propose a policy that could have the effect of shipping thousands, perhaps hundreds of thousands, of American jobs overseas?

The change in tax policy would deliver an additional $200 billion in revenue–at the same time the Administration is looking to continue boosting spending on its domestic agenda, most notably as of late: healthcare reform.

The President’s plan was also met with criticism from pro-business members of his own party concerned could handicap American firms’ competiveness in the global economy:

“This new tax burden would impair American companies’ ability to compete in global markets and sustain and create jobs here at home.” - Former Democratic New Mexico Gov. Jerry Apodaca

Editorial opposition from regional outlets has also been noteworthy. In the West, the Denver Post echoed Ballmer and other critics of the President’s plan, with in an editorial carrying the slug: “Tax Tweak Could Harm U.S. Firms.”

However, after encountering stiff resistance from top CEOs, members of his own party, editorial boards across the nation, and Republican leaders in Congress such as Utah Senator Orrin Hatch, the Administration now may not be in such a hurry anymore.

Today, President Obama met with five Governors to talk healthcare, including Washington’s Gov. Christine Gregoire. We’ve got a call into the Gregoire’s Office to ask if the topic of the President’s tax plan came up in their talks.

UPDATE: According to Gov. Gregoire’s spokesman Pearse Edwards, the issue did not come up during her D.C. meeting yesterday with President Obama.

Photo licensed under Creative Commons 2.0, Flickr.

Tags: Ballmer Obama taxes, Christine Gregoire, featured, foreign corporate tax, Microsoft, Obama, Orrin Hatch, Steve Ballmer