Source: O Estado de S. Paulo, 05/05/2009

American President Barack Obama yesterday proposed a series of measures aimed at combating tax evasion. The main targets of the tax reform will be companies and individuals who keep profits abroad and fail to send them to the United States, avoiding paying taxes. The witch hunt, through which Obama promises to "detect and pursue" tax evaders, however, is expected to promote a modest tax increase. According to the White House, there will be an additional $ 210 billion in public coffers in ten years. For the year 2010 alone, the American fiscal deficit is estimated at US $ 1,2 trillion.

Obama also wants more transparency in bank accounts that Americans maintain in tax havens. "If financial institutions do not cooperate with us, we will understand that they are hiding money in tax havens and we will act accordingly," he said.

The proposals were already part of the American president's campaign promises and are aimed at ensuring that companies "pay what they owe," Obama said. Under current law, companies operating outside the United States are taxed only if they report their earnings back to the country. If profits are kept abroad, taxes may no longer be collected indefinitely.

For Obama, this practice characterizes a “broken” tax system by favoring companies that invest abroad over those that create jobs within the country. He complained that the current law has loopholes that make it possible to "pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York." By discouraging investment from remaining outside, the initiative would help create jobs within the United States.

The government does not intend to revoke all incentives to invest abroad, but it does want to make tax collection simpler, more just and effective, Obama said. "Nobody likes to pay taxes, especially in difficult times," he said. "But most Americans are fulfilling their responsibilities, because I understand that it is a citizenship obligation, necessary to finance the costs of our common defense and our common welfare."

Under the proposal, companies would be prevented from deducting taxes on investments abroad until they pay taxes on their profits. The change would take effect from 2011. The plan will be detailed later in the month and still needs to pass through Congress, which must reject part of the measures. INTERNATIONAL AGENCIES