Tuesday, May 5, 2009

Obama repays billionaire supporters by charging them billions more in tax

President Obama has rolled out a tax crackdown on companies doing business overseas. He is claims he is closing loopholes that send jobs overseas. If enacted by Congress, this change will cost many U.S. companies billions. The high tech sector will be among the hardest hit. In a great example of "karma," many of these companies are closely tied to or led by Obama campaign supporters. Bill Gates endorsed Obama ahead of the 2008 election. This change will cost Microsoft over $1 billion a year in additional taxes. Google CEO Eric Schmidt campaigned for the president last year and has subsequently served as a technology adviser. This change will cost Google over $1 billion and raise their effective tax rate from 27.8 percent to 45.2 percent according to their 2008 annual report. We can only hope Obama supporter Warren Buffet is holding some of those distressed Chrysler and GM bonds. AP reported:
SAN FRANCISCO (AP) — President Barack Obama's plan to impose U.S. taxes on corporate America's overseas profits threatens to open a big crater in the financial statements of technology companies.

While additional taxes are rarely popular, Obama's decision to go after corporate earnings outside the United States is a particularly prickly subject for technology executives because the industry has been steadily boosting its overseas sales amid rising demand for its gadgetry and services.

If Obama's proposal becomes law, the hard-hit companies would include tech bellwethers like Hewlett-Packard Co., IBM Corp., Cisco Systems Inc., Microsoft Corp. and Google Inc. Each of those companies realized a benefit of more than $1 billion from lower foreign tax rates in their most recent fiscal years — an advantage that could lost if Obama is able to change the rules.

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