Under existing U.S. tax rules, companies may defer paying taxes at rates as high as 35 percent on most types of foreign profits so long as that money remains invested overseas. The administration proposals are intended to reduce
incentives to invest overseas so that companies would be more likely to invest in the United States.
The potential consequences of these proposals include a significant increase in the financial accounting and cash effective tax rates of affected companies, accompanied by a corresponding reduction in net income and earnings per share.