Corporate Tax Deferral Changes Take a Backseat

The Obama administration has needed to curb its ambitions in the matter of reforming tax policies for multinational corporations.

Obama had spent much of his campaign calling for closing tax loopholes that encourage multinational U.S.-based companies to “ship jobs overseas.” Those plans seemed to encompass the complex tax deferral policies that some of the big accounting firms devise for their corporate clients. Those reforms have been temporarily shelved until next year, according to The Wall Street Journal.

Companies, especially in the influential tech industry, have been pushing back steadily against the changes, lobbying leaders of key congressional committees as well as the White House. The ball is now back in the companies’ court, with White House aide Valerie Jarrett telling companies that if they don’t like the deferral changes, they should “think of other revenue generators.” One can imagine the suggestions they will receive, perhaps on the order of, “go tax those other guys.”

Meanwhile, the White House has responded to the outcry over the change of plan by saying the plans haven’t really changed all that much. Spokeswoman Jen Psaki told the Irish Times that while the administration has “an open door to the ideas and concerns of business leaders, we remain as committed to reforming international corporate taxation to end unfair loopholes as we were the day the president announced the plan.”

In other words, the Obama administration has a lot on its plate right now worrying about passing health reform legislation without making more enemies among both liberals and conservatives, as well as getting a climate change bill and financial regulatory reform legislation moving through Congress, its Afghanistan strategy set, etc., etc., etc.

In the meantime, multinational corporations can be satisfied that any changes in tax deferral rules have been deferred, at least for now.