President Barack Obama is proposing to cut the corporate tax rate from 35% to 28%—and wants an even lower effective rate for manufacturers, a senior administration official says—as the White House continues to lay down an election-year marker in the debate over tax policy. In return for a lower rate, corporations would have to give up dozens of loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face a minimum tax on their foreign earnings. Treasury Secretary Timothy Geithner is to detail aspects of Obama’s proposal, which the president first outlined in general terms in his State of the Union speech last month. Though chances of accomplishing such change in the tax system may be slim, the proposal is part of a larger tax plan for Obama that is central to his re-election strategy. It dovetails with Obama’s call for raising taxes on millionaires and maintaining current rates on individuals making $200,000 or less. While the 35% nominal corporate tax rate is the highest in the world, deductions, credits and exemptions allow many corporations to pay a much lower rate. Under the administration’s framework, the rate cuts, closed loopholes and the minimum tax on overseas earnings would not increase the deficit. That means many businesses paying substantially less than the 35% corporate tax via loopholes and subsidies could end up paying more under Obama’s plan. Others, however, would pay less, and some would simply benefit from a more simplified system. Read the full story here.
Today’s poll question: Do you support President Barack Obama’s proposal for corporate tax reform?
