As the new administration continues to pursue individuals and institutions who it believes are implicated in hiding assets from the IRS, President Obama has explained the process will boost economic growth and jobs at home.
A statement issued by the White House says the current tax code offers a competitive advantage to companies that invest and create jobs overseas and provides opportunities to avoid taxes through offshore tax havens.
To prove that, it cites statistics indicating that almost one-third of all foreign profits reported by U.S. corporations in 2003 came from just three countries, namely Bermuda, the Netherlands and Ireland, known for their low tax levels.
To remedy the situation, Obama has proposed replacing tax advantages for investing overseas with incentives to do so at home by reforming deferral rules that give tax breaks to those who reinvest overseas.
He has also vowed to continue to "get tough" on overseas tax havens.
"It is the downpayment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations," the president said at a joint news conference with Treasury Secretary Timothy Geithner.
The White House estimates the plan will save around $200 billion over the next decade and will discourage companies from enhancing their foreign operations at the expense of creating American jobs.