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American companies keep some $2 trillion in overseas accounts. It's money they could be using to hire workers and pay dividends in the United States. But they're reluctant to do that, in part because of the way the U.S. tax system works. President Obama proposed some big changes in the tax code last month, changes that would encourage U.S. companies to bring more money home. A lot of people in Washington agree with the goal, but there is sharp disagreement about how to accomplish it. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Last month the European Union issued a report about Amazon and the taxes it pays. The online retailer does a lot of business in Europe, but its corporate tax rate is in the single digits says Crawford Spence of the University of Warwick in England.
CRAWFORD SPENCE: Amazon has big operations in the U.K., but they pay very little tax here because most of their tax is paid in Luxembourg.
ZARROLI: And it's not alone. Big U.S. companies such as Starbucks and Apple have pared down their tax bill by funneling revenue into tax havens like Luxembourg and Ireland. Spence says it's totally legal.
SPENCE: Currently the rules are very complicated, very convoluted, which suits companies very well because there are always loopholes.
ZARROLI: The rules proposed by President Obama last month would change that. The president wants to lower the tax rate on overseas corporate revenue, but a 19 percent minimum tax would kick in if the companies use too many loopholes and tax havens says Edward Kleinbard of the University of Southern California Law School.
EDWARD KLEINBARD: These kinds of games are exactly the reason why you need the minimum tax. The minimum tax is the safeguard against these kinds of abuses.
ZARROLI: And the president has proposed something else. Under current law, U.S. companies can make all the money they want overseas and as long as they keep it there, they never pay a dime of U.S. taxes. That gives them a big incentive to keep profits overseas, and companies such as Apple have huge stashes of money sitting offshore. Under the proposal, companies would pay a 14 percent tax on that money regardless of whether they bring it back home. Whether these proposals will go anywhere is unclear. Kleinbard is optimistic.
KLEINBARD: The last serious Republican effort from a year ago had exactly the same concepts. The numbers were lower, but that's what good faith negotiations are all about.
ZARROLI: In other words, the president's proposals represent the kickoff of a lengthy round of bargaining with Congress. So far, Republican leaders say they're open to negotiating, but Ken Kies of the Federal Policy Group says many business leaders don't like the White House proposals.
KEN KIES: A lot of multinationals think they would be put in a worse competitive situation than they are today because at least today they don't pay U.S. tax on that income until they actually bring it back to the United States, whereas the president's proposal would impose an immediate 19 percent tax.
ZARROLI: Kies, former chief of staff of the Joint Committee on Taxation, is skeptical that corporate tax reform can go anywhere in this political climate.
KIES: It's hard to do tax reform under the best of circumstances and I wouldn't say these are the best of circumstances. With a president who's in his last two years in office, it's really hard to do really big things.
ZARROLI: Kies says a lot of people in the business world want to see tax reform because they're tired of the uncertainties surrounding the issue, but they won't go along with it if they end up paying more. And there isn't enough time left to resolve the issues President Obama has placed on the table. Jim Zarroli, NPR News, New York.
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