President Barack Obama announced today a plan that seeks to close loopholes used by companies and individuals to avoid paying taxes. In particular, Obama wants to make companies pay the proper tax rate on overseas profits and aggressively pursue those who use offshore tax havens to intentionally avoid paying taxes. His proposal is estimated to generate about $21 billion in revenue each year.The Chicago Tribune has more details:

The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home and called for more transparency in bank accounts that Americans hold in notorious tax havens like the Cayman Islands.

"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama said.

Many provisions of the complicated and much-maligned tax code in fact are worded in ways that allow people to legally cut corners. And the code is filled, likewise, with language that in many circumstances authorizes legal tax end-arounds, if not pure avoidance.

Senate Finance Committee Chairman Max Baucus (D-MT), in typical fashion, commented that we really didn't know enough about how companies are cheating on their taxes:

The President’s proposals highlight an important point — our corporate international tax system needs reforming. There are a number of Finance Committee ideas reflected here, such as the proposal to address offshore tax evasion and making the R&D credit permanent for businesses, but further study is needed to assess the impact of this plan on U.S. businesses.

Hmmm...more study. I wonder how much revenue will that bring in each year? I wonder how many campaign contributions?

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