President Barack Obama is making an opening bid on overhauling corporate taxes and pitching it as a means to boost infrastructure spending, a move that could clear a rare path toward common ground in a deeply divided capital.
As The Wall Street Journal reports, Obama wants U.S. companies to pay a 14% tax on the approximately $2 trillion of overseas earnings they have accumulated. They would face a 19% minimum tax on future foreign profits. Companies could reinvest those funds in the U.S. without paying additional tax.
In making the pitch in his roughly $4 trillion 2016 budget plan unveiled today, the president is elevating two issues that previously gained traction with lawmakers of both parties: changing the tax code on overseas profits and raising spending on highways and transit systems.
Doug Holtz-Eakin, a conservative economist and former adviser to GOP presidential candidates, says the proposal appears to be a starting point for broader negotiations with lawmakers.
“The good news seems to be that the administration has agreed that lockout [of overseas profits] is an important phenomenon,” says Holtz-Eakin, president of the American Action Forum, a conservative think tank. He said he is concerned about the proposed tax-rate structure. “But let’s face it, it is an opening bid, not a result.”
Gene Sperling, a former top economic adviser to Obama, says criticism over where to set the rates should be taken in stride.
“When people are putting out numbers, you’re opening up a process for negotiation,” he says.
