"The proposal to tax companies' overseas earnings, rather than making our tax code simpler and more competitive through reform, is an area that gives us significant pause," Dean Garfield, president and CEO of Information Technology Industry Council (ITI), said in a statement yesterday.
"We urge the Administration and Congress to give our broken tax code a complete reboot so that our innovative technology companies can continue to drive America's economic growth by leading the global marketplace," Garfield said.
Noting that Obama is right to focus on economic growth and job creation for the middle class, he said that his approach is wrong.
"Certainly, focusing on STEM education programmes, smart infrastructure projects to build a modern transportation system, and fixing our broken immigration system would drive undeniable economic benefits for the country," Garfield said.
"The Budget closes loopholes that perpetuate inequality by allowing the top one per cent of Americans to avoid paying any taxes on their accumulated wealth and uses that money to help more young people go to college," he said.
Later in a news conference, Jason Furman, top economic advisor, said the proposal that Obama is making would be mandatory on all overseas earnings. "As a result, it raises money -- USD 270 billion over 10 years -- as opposed to a repatriation holiday would lose money.
This is part of a plan to reform the tax system. So on a going-forward basis, you would have a 19 per cent minimum tax on all the earnings of foreign subsidiaries of US corporations," he said.
Republican Party Congressman Charles W Boustany said that the President's new plan to finance roads and bridges is problematic because of its high rates and immediate effective date, denying businesses the ability to plan ahead with a phase-in period.
"This will weaken American competitiveness and encourage more American companies to relocate to more favourable tax environments abroad. We need comprehensive tax reform that will lower overall corporate rates and encourage growth, not a six-year band-aid that won't fix these problems in the long term," he said.