White House Unveils Tax-Rate Details
Higher Rates Would Hit Couples at 'Taxable-Income' Levels Starting at About $235,000


Images: Everett (Roosevelt, Johnson, Reagan); Associated Press (Wilson, Obama) Note: From 1948, rates are for married persons filing jointly. Rates exclude the effect of most tax credits as well as add-on taxes levied in certain years, with some exceptions. For some years, rates shown were subject to maximum effective rate limitations or a maximum rate on certain income. Source: IRS

WASHINGTON -- The Obama administration provided more details on the scope of its tax proposals, showing the impact of rate increases on higher earners would hit couples with about $235,000 of "taxable income," or income after deductions and exemptions.

The administration also revealed new details of its initiatives to shut down offshore tax shelters used by some investors and businesses, and to raise taxes on the overseas earnings of many U.S. multinationals.

During the presidential campaign, Barack Obama said he wouldn't raise taxes on couples earning less than $250,000 but didn't give a precise definition of the term. On Monday, the administration published more details of how exactly the rate increases, if approved by Congress, would be implemented.

The Treasury Department's description, known as the "green book," showed that the new 36% rate would apply to an adjusted gross income of $250,000 "less the standard deduction and two personal exemptions." Those items effectively represent the minimum that a couple could subtract from adjusted gross income, officials said. A senior administration official estimated that that produces taxable income of about $235,000.

Many couples with adjusted gross income of $250,000 have itemized deductions that would put their taxable income well below that $235,000 threshold...

...The administration also laid out plans to attack several offshore tax shelters, including one that aims to help investors receive corporate dividends without incurring U.S. withholding tax.

Two other proposals would go after techniques that multinationals use to minimize taxes by shifting around intangible property and internal debt among overseas subsidiaries. Yet another proposal would seek to put further limits on the foreign tax-credit system. The newest proposals would raise about $10 billion in the decade.

Business leaders have been sharply critical of the administration's proposed crackdown on offshore tax avoidance, including limits on companies' ability to defer U.S. taxes on their overseas income. The deferral system was intended to put overseas operations of U.S. companies on the same footing as their foreign counterparts.

"The proposed tax increases on U.S. companies by the Treasury threaten the jobs of tens of millions of U.S. workers and our future economic growth," said John Castellani, president of the Business Roundtable. "Adopting these changes will hamstring American competitiveness."...

John D. McKinnon at john.mckinnon@wsj.com - Wall Street Journal

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