Treasury Report on Obama Administration Tax Proposals

We are pleased to provide this overview of key U.S. tax change proposals set forth in the Treasury “General Explanations of the Administration’s FY 2010 Revenue Proposals" (the “Green Book”) which was released on May 11. The proposals in the Green Book are based on various sources including prior Treasury and Joint Committee on Taxation studies, legislative proposals, and proposals of prior Administrations. Certain aspects of the proposals seem clear:

• They are meant to raise significant tax revenue to meet the nation’s fiscal crisis and government budget requirements.

• They do not consider taxpayer cost of compliance.

• They intend to fulfill President Obama’s campaign pledge of a widespread – but limited – tax cut for virtually all (95%) of U.S. taxpayers including small business, funded primarily with international tax reform and repeal of Bush Administration reductions in individual tax rates.

• They intend to fund the cost of President Obama’s planned health care reform proposals with limitations on itemized deductions for high bracket taxpayers, improvement in tax compliance and penalty enforcement and selective tax accounting changes.

• They impose significant record maintenance obligations for all persons participating in an investment in the U.S. and extend the period of limitations that will apply to violations of the record maintenance rules from three years to six years.

• They continue the agoraphobia first evidenced after the September 11, 2001, terrorist attacks on the U.S., but redirect its focus to U.S. persons that are tax cheats recycling funds to the U.S. through offshore banks.

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