U.S. President Barack Obama plans to impose a minimum of 19 percent tax on US-based companies' future overseas earnings to add to government revenues.

He is also looking to implement a 14 percent mandatory tax on $2 trillion in stockpiled offshore profits, not considering whether the money will be returned to the U.S.,  to add to government funds for  infrastructure projects, sources say.

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Currently, American firms pay the full 35 percent U.S. tax on income earned globally, receiving tax credits for payments to non-local governments. The U.S. tax would only be paid when the greenback is brought back home, incentivizing the companies to push profits outside and leave them there.

Microsoft Corp., for example, has $92.9 billion profits outside the U.S. If the new tax is imposed, they would owe the government $29.6 billion (31.9%). Because tax rules call for paying the difference between foreign tax rate and the 35 percent corporate tax, this means Microsoft could have paid as little as 3.1 percent in foreign taxes.

In this light, Obama seeks to lower the business tax rate to 28 percent, and 25 percent for manufacturers. Republicans on the other hand prefer a 25 percent rate for all corporations. The political leader of the largest economy seeks to make this proposal part of a $3.99 trillion budget to aid lower and middle class Americans.

This will yield $566 billion over 10 years, while the one-time tax on stockpiled profits would ring in $238. Obama's tax proposal estimates the U.S. economy growing to $18.8 trillion, 4.4 percent above this year's target $18 trillion.

However, these proposals do not go without meeting adversary especially from the Republicans or U.S. firms themselves. Dave Camp, former Republican chairman of the House Ways and Means Committee, made a tax reform last year where he sought taxing one-time profits at 8.75 percent for cash and 3.5 percent for other assets.

However, this did not receive favorable responses from U.S. Multinational firms.

Treasury Secretary Jacon K. Lew says "...[E]xpect the chairman and members of the committee and members of the committee to take a closer look at whether these proposals will put American-based companies at a further disadvantage, incentivize foreign takeovers, and make America a comparatively less advantageous place to center business investment and activity."

 It is likely that the president's tax reform plans would bring about a $474 billion deficit for the fiscal year beginning Oct. 1. The deficit as a percentage of gross domestic product would be 2.5 percent down from 3.2 percent in fiscal 2015.

TagsPresident Barack Obama, Corporate Tax, revamp