EuroWire March 2015

Transatlantic cable

of taxes inde nitely by simply leaving its pro ts in the low-tax jurisdictions in which they were generated. BBC News (2 nd February) cited a calculation by research rm Audit Analytics that, as of April 2014, American companies had $2.1 trillion in pro ts stashed abroad. The conglomerate General Electric was found to have the most pro t ($110 billion) stored overseas. Tech giants Microsoft and Apple also avail themselves of the tax loophole. The White House said the immediate 14 per cent tax would raise $238 billion, which would help fund a $478bn public works programme of road, bridge and transport upgrades. President Obama told broadcaster NBC that, despite several years of economic improvement, wages and incomes for middle-class American families were ‘just now ticking up.’ While the projected 19 per cent permanent tax on overseas pro ts is far lower than the current USA top corporate tax rate of 35 per cent, the expectation is that its implementation would encourage multinationals to create jobs at home. † A device enabling companies to put o , essentially forever, the payment of taxes on trillions in pro ts may seem indefensible. But its elimination faces long odds in a Republican Congress united in erce opposition to all things Obama. Even so, the scrutiny attracted to it by the presidential push has to be very unwelcome in the executive suites of some of the world’s most successful companies. Dorothy Fabian USA Editor

The widely consulted barometer of customer morale is at its highest since August 2007, the Conference Board said. † In January, on a year-to-date basis, the US dollar was up 8.8 per cent versus the Euro, 3.2 per cent against the British pound, and 2.4 per cent against the Yen, with almost all of the gains coming since midyear 2014. While recognising a signi cant performance, David Kelly, chief global strategist for J P Morgan Funds, observed that currency movements have always been complicated in both their causes and consequences. Writing in Barron’s (31 st January), Dr Kelly also suggested that the strength of the greenback is encouraging for future capital investment. While a higher dollar presents challenges for American corporations, he said: “At this time it appears to be a positive force in the global economy and, in the long run, for global investors.” President Barack Obama seeks to close a tax loophole that allows American rms to avoid paying taxes on overseas pro ts The USA scal budget for 2016, presented 2 nd February, contained some additional bad news for big American multinationals. It includes a proposal for a one-o 14 per cent tax on US pro ts stashed overseas, as well as a 19 per cent tax on future pro ts as they are earned. Currently no tax is due on foreign pro ts so long as they are not brought into the USA. A company may postpone the payment

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March 2015